Damages in Employment Litigation

Damages are awarded to a prevailing party in a lawsuit.  They may come in the form of money, or in some cases, the court may order the opposing party to perform a certain action.

Types of Damages:

Compensatory Damages: This is a sum of money awarded to a party that represents the actual harm suffered or loss incurred.  Since damages cannot be presumed, one must prove what the actual out-of-pocket losses are.  For example, projections of future lost profits will not be awarded unless they are definite and certain.

Incidental Damages: Incidental damages are traditionally direct out-of-pocket expenses for filing a lawsuit and related court costs (such as process server fees).  These direct costs of litigation are sometimes awarded to the prevailing party in a litigation as part of the party’s loss.

Liquidated Damages: This is an amount of money agreed on in advance by parties to a written contract to be paid in the event of a breach or dispute.  If it is not possible to compute the amount of the loss, a judge may uphold the amount specified.  However, in many circumstances, when the amount specified has no actual basis in fact, a judge may disregard it, viewing the amount merely as a penalty.

Nominal Damages: This is a small amount of money (e.g., $1.00) awarded by the court.  Sometimes a party may win the lawsuit but not have proved suffering or actual damages.

Punitive Damages: Also called exemplary damages, punitive damages represent money awarded as punishment for a party’s wrongful acts beyond any actual losses.  When punitive damages are awarded, a judge is often sending a signal to the community that similar outrageous, malicious, or oppressive conduct will not be tolerated.  Under the laws of many states, punitive damages can be awarded only in certain types of lawsuits, such as personal injury and product liability actions, and not lawsuits to enforce employment contracts or business agreements.

Specific Performance:  This is a directive for the court by the party being sued (i.e., the defendant) to perform a certain action such as sell a business or not work for a competitor pursuant to a clause in an employment contract.  Specific performance is typically not awarded if monetary damages can make the party seeking the relief whole.

Injunction: This is a court order restraining one party from performing or refusing to perform an action or contract.

Mitigation of Damages: This is a legal principle that requires a party seeking damages to make reasonable efforts to reduce damages as much as possible; for example, to secure comparable employment or file for unemployment benefits if a job cannot be obtained in the short term.

 If an employer is interested in seeking to stop you from establishing a competing business, or working for a competitor, an action called a preliminary or temporary injunction can be commenced.  The employer would then requesting a hearing for an order to show cause immediately after the lawsuit is filed.  If a judge rules in favor of the motion, the injunction would be granted and you would be enjoined from the action you were taking.

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