Punitive Damages (Employment)

Non-compensatory damages intended to punish an employer for malicious or reckless disregard of an employee's federally protected rights, available under Title VII, the ADA, and the ADEA. Under Title VII and the ADA, punitive damages are capped by employer size, ranging from $50,000 for small employers to $300,000 for employers with more than 500 employees, which constrains aggregate recovery in class cases. Funders model punitive exposure separately from compensatory damages and weight it against the evidentiary burden required to establish the requisite mental state.

Because Title VII and ADA punitive damages are capped by employer size — as low as $50,000 for small employers — funders model this exposure separately from compensatory damages and weight it against the evidentiary burden of proving malice or reckless indifference, rather than assuming any large punitive award. For claims against very large employers, the cap becomes less binding in absolute terms, but funders still discount punitive exposure heavily given how fact-specific the required mental-state showing is.