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Recent Statute Requires an Employee’s Mitigation of Lost Wages to Be Held Retroactively

West Virginia juries traditionally awarded employees generous or “double” damages after determining they were wrongfully terminated by an employer who acted with malicious intent or willful disregard for their rights. Double-damage awards typically reflect punitive damages and compensatory damages, which can include both back pay and front pay. Front pay compensates the employee for the amount of wages and benefits that they would have earned if they had stayed in that position for the rest of their working years before being wrongfully terminated. New statutes, however, have changed that practice.

An employee sued a former employer under the West Virginia Human Rights Act, alleging he was wrongfully terminated. He claimed he had been unlawfully terminated based on his race, national origin, and ancestry. The case was postponed, however, so that the court could determine whether to follow the guidelines of two pending statutes that would decide whether the employee would be required to mitigate lost wages.

The plaintiff argued that the statutes could not be applied to his case because they had not yet gone into effect and were not intended to be applied retroactively. The employer argued that a plaintiff does not have a right to damages until they are proven at a trial; therefore, the plaintiff had no vested right to unmitigated front pay or punitive damages.

The Supreme Court of West Virginia determined WV Code section 55-7E-3 abolished the malice exception and that an employee has a responsibility to mitigate damages when alleging wrongful termination. Juries had been awarding employees unmitigated front and back pay damages when it was proved that an employer acted with malicious intent or with willful disregard for the employee’s rights. The new statute requires employees to mitigate the amount of front pay compensatory damages, which they could do by accepting employment elsewhere that pays the same wages as the former position.

The court certified that section 55-7-29, which is designed to limit the amount of punitive damages awarded, does not impact an employee’s vested or substantive right to any future pay. To be awarded punitive damages, the plaintiff must show actual damages and prove they are the result of the employer having acted with malice or with conscious, reckless, and outrageous indifference to the health, safety and welfare of others. The jury’s punitive damages award “may not exceed the greater of four times the amount of compensatory damages or $500,000.”

The West Virginia Supreme Court found that the statutes were remedial in nature and not intended to be applied retroactively to terminations before their effective date. It was held that the trial date would determine whether an employee must mitigate lost wages when alleging wrongful termination. If the employee was terminated after the statute went into effect, he has the responsibility to mitigate damages before filing a lawsuit.

Pullin, Fowler, Flanagan, Brown & Poe may be able to answer your company’s questions or concerns about a former employee’s claim of wrongful termination. Call us at 304-344-0100 or contact us online for answers and assistance.

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