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Walmart was hit with a $125 mln verdict, but the law is on its side

7 minute read

REUTERS/John Gress

A federal jury in Wisconsin needed only three hours earlier this month before deciding to tag America’s largest employer with $125 million in punitive damages for firing a longtime employee with Down Syndrome.

Marlo Spaeth held a job at Walmart for about 16 years without issue, but she began struggling after the company implemented an algorithm-based scheduling system in 2014. The Equal Employment Opportunity Commission argued on her behalf that her disability made it difficult to adapt to a new routine. Walmart fired her for attendance and punctuality issues after she was assigned a new shift schedule.

EEOC Chair Charlotte Burrows said after the trial that the “substantial jury verdict” against the world’s largest retailer “sends a strong message” to other employers and businesses.

But it seems that’s only true in theory.

As Walmart spokesman Randy Hargrove noted, the jury’s award will be lowered by the judge to somewhere around $300,000 – the cap on damages in lawsuits under the Americans With Disabilities Act against employers with more than 500 workers.

Sandra Sperino, a professor at the University of Cincinnati College of Law, told me that one of the “weird” things about the statute is that it specifies that the jury shouldn’t be told about the damages cap. Sperino wrote a 2017 book called "Unequal: How America’s Courts Undermine Discrimination Law." She said she has plans to incorporate the Walmart case into her courses because it seems like a good tool to teach the issue of statutory damages caps.

“The jury deliberates without any knowledge of the cap. Then, when it actually comes into play, it’s the judge that reduces the award according to the cap,” she said.

There’s certainly a message being sent, though of a different sort than Burrows, or the jurors, likely meant.

Last Friday, a week after the Walmart verdict was revealed on July 16, the Occupational Safety and Health Administration announced a major, successful enforcement action against several businesses. The action involved a liquid nitrogen leak at a Georgia chicken processing plant that killed six people and landed 12 others in the hospital.

The federal workplace safety agency cited Foundation Food Group Inc and three other companies for “avoidable” deaths caused by “willful violations,” including failing to inform some workers about the colorless, odorless and deadly gas being used in the onsite freezer and for not training them on precautions and emergency procedures.

The penalties in that case were limited by law, too. OSHA also has a damages cap – just like the ADA and the 1964 Civil Rights Act, which protects workers against discrimination based on race, color, religion, sex, or national origin. What's more, the OSHA statute doesn’t actually allow workers the right to sue employers for safety and health violations (OSHA pursues claims and levies fines instead).

The price to pay for willful violations that killed six people? Just $998,637, or roughly $166,000 for each life, not counting the serious injuries.

Labor Secretary Marty Walsh commented that $1 million is both a relatively large fine by OSHA standards, and “not enough” of a disincentive for businesses that abuse employees and cut corners on regulatory compliance.

Taken together, the outcomes in the two cases exemplify how toothless many U.S. labor laws have become, either by legislative design or through judicial interpretation.

“Some of the employment discrimination statutes have even more limited damages than the ADA and Title VII of the Civil Rights Act,” Sperino said. “Those statutes don’t necessarily stand out as outliers.”

The cases also demonstrate a glaring need to strengthen disincentives against violating workers' rights and to reform workplace laws on the federal level more generally, given the improbable odds workers face in seeking to enforce or protect their rights in the workplace.

At the same time, we know that it isn’t unreasonable for very large businesses in particular to view certain violations of workers’ rights, and the related consequences, as a normal cost of doing business or even as sensible and profitable moves. Walmart’s computer scheduling system may have violated Spaeth's and other workers’ rights, for example, but the money it will save and profits it will make as a result are likely to significantly outweigh any costs from employees who might decide to spend years in litigation before receiving damages that are limited by law.

Walmart did not respond to my inquiries about the recent ADA decision and the company's business strategy in setting workers' schedules.

In 1990, when President George H.W. Bush was signing the ADA, he addressed a “special word to our friends in the business community.”

“I want to reassure you right now that my administration and the United States Congress have carefully crafted this act,” the president said. “We’ve all been determined to ensure that it gives flexibility” and “we’ve been committed to containing the costs that may be incurred.”

The conspicuous defects in the law that we've witnessed since then persist despite that we now know the concerns about hurting business are overblown. Empirical research by Kevin Clermont and others in 2009 concluded that "results in the federal courts disfavor employment discrimination plaintiffs, who are now forswearing use of those courts."

But there are glimmers of hope, at the state level, anyway: In 2019, Oklahoma struck down as unconstitutional its law that capped the amount personal injury plaintiffs could get for pain and suffering, and Oregon did the same last year.

Similar efforts on the federal level are just as necessary to establish real access to justice in the American workplace.

(Note: This story has been updated to reflect the correct name of Walmart spokesman)

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Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

Hassan Kanu writes about access to justice, race, and equality under law. Kanu, who was born in Sierra Leone and grew up in Silver Spring, Maryland, worked in public interest law after graduating from Duke University School of Law. After that, he spent five years reporting on mostly employment law. He lives in Washington, D.C. Reach Kanu at hassan.kanu@thomsonreuters.com

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