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Judges' "Mitigation of Damages" Doctrine Harms Injured Employees

Thursday, 08 August 2013 00:00 By Ellen Dannin and Ann Hodges, Truthout | News Analysis

Cubical.(Photo: Andrew Sorensen / Flickr)The duty to "mitigate damages" means that, in certain circumstances, a person who is harmed by someone else's bad act has a duty to "mitigate" the harm. In plain language, it means that an innocent person who has been harmed must take action to stem the harm and minimize the amount of damages the bad actor has to pay. The duty to mitigate damages also means that an innocent person who does not take action to mitigate may not get full money damages from the wrongdoer.

Mitigation may seem to force an innocent person to let the wrongdoer off the hook, but there can be good reasons for it. Of most importance, it can reduce overall harm.

Traditionally, the duty to mitigate harm applies in two areas of law - tort and contract law, including employment contracts. For example, suppose that an employer promises an employee a job for one year but, even though the employee does good work, the employer fires the employee. That firing violates the employer's contract with the employee, so the employer must pay the employee for the rest of the year.

But the requirement to mitigate means that the employee cannot just sit back and collect back pay. Instead, the innocent employee has a legal obligation to "mitigate" the harm caused by the employer's wrongful action by making a serious search for a new job.

That obligation to mitigate - in nonlegal terms, to limit the employee's harm - works to the employer's advantage, because the employer will owe the employee less money if she finds another job or if she fails to prove she adequately searched for a new job. Putting the burden of proof on the employee may not sound odd to a nonlawyer, but it is not the norm, and it can make a big difference to the case.

Burdens of proof are about picking winners and losers. The party that has a burden of proof has a harder job proving its case.

Normally, the accuser - a plaintiff or a prosecutor - must show that the law has been violated. Then, the accused, here, the employer, can present evidence in her or his defense. In this case, the employer's defense might be that there was no contract or that the employee violated the contract and was fired for cause.

The failure to mitigate is a special type of defense. It is a defense that basically says, "Yes, but . . ." Here, it would be the employer saying, "Yes, I broke our contract by firing the employee, but she does not get back pay because she did not make an adequate search for a new job."

However, the judicial amendments have picked the employee to lose by placing that burden on the employee to prove she had made an adequate job search after she was wrongfully fired.

What if an Employer Violates the NLRA by Firing an Employee?

An employee who is fired for discussing working conditions with another employee or for joining a union is protected by the National Labor Relations Act, not contract or tort law. When an employer violates the NLRA, that firing does not violate a private right of the employee. Instead, that firing violates public rights.

In many ways, an NLRA case is more similar to a criminal violation. Both NLRA and criminal cases are investigated and prosecuted by the government on behalf of the public. An employer that violates the NLRA is not sent to jail, however. Instead, it owes the wrongfully fired employee back pay. That back pay does more than just make the injured employee whole. It also chastens an employer who has violated a public right and shows other employees and employers that these rights will be protected by the government.

"Reasonable Search" Obligation for Employees

Over time, however, judges have judicially amended the NLRA to make it harder for a wronged employee to get back pay. These judicial amendments force employees to prove they have adequately mitigated the harm, using the same doctrine courts use for private rights.

For its first six years of existence, the NLRB did not require employees to mitigate their lost earnings. The NLRB also did not let employees get a double recovery, however. Instead, the NLRB adjusted back pay the employer owed the employee by subtracting any employee earnings.

In 1941, in "Phelps Dodge," the Supreme Court held that back pay orders should remedy employees' actual lost earnings only. If an employee failed to mitigate lost earnings, the employer could ask for back pay to be reduced. Over time, there were more hoops wrongfully fired employees had to jump through. For example, employers could ask that back pay be reduced because an employee had failed to prove that reasonably diligent efforts had been made to find a new job. The mitigation obligation is nowhere found in the NLRA and conflicts with the public interest purpose of the NLRA.

Fixing Unfair Burdens on Injured Employees

In 2011, the current acting general counsel of the NLRB, Lafe Solomon, recognized the harm this judicial amendment caused and acted to minimize its negative effect on injured employees by insuring full reimbursement for employees for expenses involved in searching for work. 

Employees who have been illegally fired have a right to be put into the position they would have been in had their employer not violated the law, including back pay and reimbursement for other losses caused by the unfair labor practice, and the expenses of searching for a new job, including the cost of transportation, tools or other equipment used for a new job, and moving costs to the new job.

Rather than requiring the employer to reimburse all job search expenses - expenses the employee would not have, but for the wrongful firing - an accounting trick was used to cut the amount paid the employee. The job search expenses were first divided into quarters of each year. Then the job search expenses were compared to any earnings the discharged employee had in each quarter. Only if the employee's earnings in each quarter were lower than the employee's job search expenses for that quarter did the employee get reimbursed for those expenses.

General Counsel Solomon said, "It does not advance the purposes of the act to require discriminatees to search for work and often incur expenses in their search and yet not reimburse them for those expenses because their search was unsuccessful. In order for employees truly to be made whole for their losses, it is therefore appropriate for them to receive full reimbursement for these expenses . . ."

This initiative seems so completely appropriate it is hard to understand why it has taken so long to put it in place. It does not cure the harm of judicial amendments, but at least it reduces it.

This is the 16th article in the Judicial Amendment Project series on the history of the National Labor Relations Act. The stories in the series, to date, include: 

Why the National Labor Relations Act Is a Weak Law Today - and How We Can Restore its Power 

Judicial Amendments and the Attack on Worker Rights 

Solidarity NOT Forever: How the Supreme Court Kicked Retirees Into the Gutter 

Strike and You're Out: The Supreme Court's Destruction of the Right to Strike

A Strike Is a Strike and Only a Strike 

At an Impasse: Collective Bargaining Under the Judicial Amendments

The Supreme Court Empowers Employers to Lock Out Workers 

The Judicial Amendments' 1-2-3-4 Punch to Collective Bargaining 

Extra! Extra! Rich Corp Execs Shut Down the NLRB! Then and Now 

The Dues and Don'ts of Union Dues 

Union Dues and Don'ts: How Conservative Interest Groups Are Reducing Unions' Financial Resources 

Lechmere: The Employer's "Right" to Keep Employees Isolated and Uninformed 

Judicially Amended "Remedies" Fail to Promote Purposes of NLRA

Turning the NLRA into Groundhog Day, the Movie

Copyright, Truthout. May not be reprinted without permission.

Ellen Dannin and Ann Hodges

Ellen Dannin is Fannie Weiss distinguished faculty scholar and professor of law at Penn State Dickinson School of Law and author of "Taking Back the Workers' Law - How to Fight the Assault on Labor Rights."

Ann Hodges is professor of law at the University of Richmond where she teaches and writes in the areas of labor and employment law. Prior to joining the faculty, she practiced labor and employment law in Chicago and worked for the National Labor Relations Board as a field examiner.


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Judges' "Mitigation of Damages" Doctrine Harms Injured Employees

Thursday, 08 August 2013 00:00 By Ellen Dannin and Ann Hodges, Truthout | News Analysis

Cubical.(Photo: Andrew Sorensen / Flickr)The duty to "mitigate damages" means that, in certain circumstances, a person who is harmed by someone else's bad act has a duty to "mitigate" the harm. In plain language, it means that an innocent person who has been harmed must take action to stem the harm and minimize the amount of damages the bad actor has to pay. The duty to mitigate damages also means that an innocent person who does not take action to mitigate may not get full money damages from the wrongdoer.

Mitigation may seem to force an innocent person to let the wrongdoer off the hook, but there can be good reasons for it. Of most importance, it can reduce overall harm.

Traditionally, the duty to mitigate harm applies in two areas of law - tort and contract law, including employment contracts. For example, suppose that an employer promises an employee a job for one year but, even though the employee does good work, the employer fires the employee. That firing violates the employer's contract with the employee, so the employer must pay the employee for the rest of the year.

But the requirement to mitigate means that the employee cannot just sit back and collect back pay. Instead, the innocent employee has a legal obligation to "mitigate" the harm caused by the employer's wrongful action by making a serious search for a new job.

That obligation to mitigate - in nonlegal terms, to limit the employee's harm - works to the employer's advantage, because the employer will owe the employee less money if she finds another job or if she fails to prove she adequately searched for a new job. Putting the burden of proof on the employee may not sound odd to a nonlawyer, but it is not the norm, and it can make a big difference to the case.

Burdens of proof are about picking winners and losers. The party that has a burden of proof has a harder job proving its case.

Normally, the accuser - a plaintiff or a prosecutor - must show that the law has been violated. Then, the accused, here, the employer, can present evidence in her or his defense. In this case, the employer's defense might be that there was no contract or that the employee violated the contract and was fired for cause.

The failure to mitigate is a special type of defense. It is a defense that basically says, "Yes, but . . ." Here, it would be the employer saying, "Yes, I broke our contract by firing the employee, but she does not get back pay because she did not make an adequate search for a new job."

However, the judicial amendments have picked the employee to lose by placing that burden on the employee to prove she had made an adequate job search after she was wrongfully fired.

What if an Employer Violates the NLRA by Firing an Employee?

An employee who is fired for discussing working conditions with another employee or for joining a union is protected by the National Labor Relations Act, not contract or tort law. When an employer violates the NLRA, that firing does not violate a private right of the employee. Instead, that firing violates public rights.

In many ways, an NLRA case is more similar to a criminal violation. Both NLRA and criminal cases are investigated and prosecuted by the government on behalf of the public. An employer that violates the NLRA is not sent to jail, however. Instead, it owes the wrongfully fired employee back pay. That back pay does more than just make the injured employee whole. It also chastens an employer who has violated a public right and shows other employees and employers that these rights will be protected by the government.

"Reasonable Search" Obligation for Employees

Over time, however, judges have judicially amended the NLRA to make it harder for a wronged employee to get back pay. These judicial amendments force employees to prove they have adequately mitigated the harm, using the same doctrine courts use for private rights.

For its first six years of existence, the NLRB did not require employees to mitigate their lost earnings. The NLRB also did not let employees get a double recovery, however. Instead, the NLRB adjusted back pay the employer owed the employee by subtracting any employee earnings.

In 1941, in "Phelps Dodge," the Supreme Court held that back pay orders should remedy employees' actual lost earnings only. If an employee failed to mitigate lost earnings, the employer could ask for back pay to be reduced. Over time, there were more hoops wrongfully fired employees had to jump through. For example, employers could ask that back pay be reduced because an employee had failed to prove that reasonably diligent efforts had been made to find a new job. The mitigation obligation is nowhere found in the NLRA and conflicts with the public interest purpose of the NLRA.

Fixing Unfair Burdens on Injured Employees

In 2011, the current acting general counsel of the NLRB, Lafe Solomon, recognized the harm this judicial amendment caused and acted to minimize its negative effect on injured employees by insuring full reimbursement for employees for expenses involved in searching for work. 

Employees who have been illegally fired have a right to be put into the position they would have been in had their employer not violated the law, including back pay and reimbursement for other losses caused by the unfair labor practice, and the expenses of searching for a new job, including the cost of transportation, tools or other equipment used for a new job, and moving costs to the new job.

Rather than requiring the employer to reimburse all job search expenses - expenses the employee would not have, but for the wrongful firing - an accounting trick was used to cut the amount paid the employee. The job search expenses were first divided into quarters of each year. Then the job search expenses were compared to any earnings the discharged employee had in each quarter. Only if the employee's earnings in each quarter were lower than the employee's job search expenses for that quarter did the employee get reimbursed for those expenses.

General Counsel Solomon said, "It does not advance the purposes of the act to require discriminatees to search for work and often incur expenses in their search and yet not reimburse them for those expenses because their search was unsuccessful. In order for employees truly to be made whole for their losses, it is therefore appropriate for them to receive full reimbursement for these expenses . . ."

This initiative seems so completely appropriate it is hard to understand why it has taken so long to put it in place. It does not cure the harm of judicial amendments, but at least it reduces it.

This is the 16th article in the Judicial Amendment Project series on the history of the National Labor Relations Act. The stories in the series, to date, include: 

Why the National Labor Relations Act Is a Weak Law Today - and How We Can Restore its Power 

Judicial Amendments and the Attack on Worker Rights 

Solidarity NOT Forever: How the Supreme Court Kicked Retirees Into the Gutter 

Strike and You're Out: The Supreme Court's Destruction of the Right to Strike

A Strike Is a Strike and Only a Strike 

At an Impasse: Collective Bargaining Under the Judicial Amendments

The Supreme Court Empowers Employers to Lock Out Workers 

The Judicial Amendments' 1-2-3-4 Punch to Collective Bargaining 

Extra! Extra! Rich Corp Execs Shut Down the NLRB! Then and Now 

The Dues and Don'ts of Union Dues 

Union Dues and Don'ts: How Conservative Interest Groups Are Reducing Unions' Financial Resources 

Lechmere: The Employer's "Right" to Keep Employees Isolated and Uninformed 

Judicially Amended "Remedies" Fail to Promote Purposes of NLRA

Turning the NLRA into Groundhog Day, the Movie

Copyright, Truthout. May not be reprinted without permission.

Ellen Dannin and Ann Hodges

Ellen Dannin is Fannie Weiss distinguished faculty scholar and professor of law at Penn State Dickinson School of Law and author of "Taking Back the Workers' Law - How to Fight the Assault on Labor Rights."

Ann Hodges is professor of law at the University of Richmond where she teaches and writes in the areas of labor and employment law. Prior to joining the faculty, she practiced labor and employment law in Chicago and worked for the National Labor Relations Board as a field examiner.


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