The Limits of Monetary Protection Afforded Employers by the After-Acquired Evidence Doctrine
October 1, 2008

The after-acquired evidence doctrine was adopted by the United States Supreme Court in an age discrimination case in 1995, McKennon v. Nashville Banner Publ'g Co. The doctrine has general applicability to virtually all federal antidiscrimination statutes, including Title VII and the Americans with Disabilities Act. Under the after-acquired evidence doctrine, if an employer later learns of wrongdoing by the employee (such as resume fraud or on-the-job misconduct for which the employee would have been terminated), the employer may utilize that evidence to limit its damages to an employee claiming that he or she was the victim of unlawful discrimination. Under the after-acquired evidence doctrine, the employer must establish that the wrongdoing was of such severity that the employee would have been terminated on those grounds alone if the employer had known about them. Once that threshold is met, an employer may limit its liability for back pay from the date of termination to the date the employer discovered the conduct for which it would have fired the employee. Furthermore, the employee would not be entitled to an award of front pay and would not be entitled to reinstatement.

The New Jersey Supreme Court recently analyzed whether the after-acquired evidence doctrine should preclude the recovery of emotional distress damages or punitive damages in the context of a hostile work environment claim under the New Jersey statutory antidiscrimination laws. While this decision is certainly not binding under Colorado state law or under federal law, the New Jersey Supreme Court relied upon federal law in entering its decision, and its analysis is helpful in determining an employer's responsibilities under the federal antidiscrimination acts. In the New Jersey case, decided in May of this year, Cocchetti v. Morris County Sheriff's Office, the plaintiff participated in a voluntary blood drive for the employer at which time it was discovered that the employee had hepatitis C. Co-employees thereafter engaged in repeated acts of verbal abuse and taunting, 75 of which were documented by the employee in a report to his employer. The acts included the exaggerated use of household disinfectants in the plaintiff's presence, name-calling, smashing bottles of mouthwash against the plaintiff's locker, barring radio communications by the plaintiff, and ultimately an attempt to run the plaintiff over or narrowly miss him with a speeding automobile. Despite the plaintiff's complaints, he alleged that the employer failed to take appropriate action to protect him from the hostile work environment, ultimately causing the plaintiff to resign after the incident involving the vehicle. The plaintiff brought a hostile work environment claim based upon disability discrimination.

The employer contended that a 20-year-old conviction that had been expunged on the plaintiff's criminal record was not disclosed by the plaintiff in his employment application and, therefore, the employee's claims were barred. The trial court agreed and granted summary judgment in favor of the employer.

The New Jersey Supreme Court reversed. With respect to the damages element of plaintiff's claim, the court held: "Even if the [employer] would have fired [plaintiff] upon learning of his prior conviction, plaintiff was entitled, during the period of time when he was employed, to be protected from discrimination and to serve in a workplace free from the hostility that he endured." Thus the recoverability of emotional distress and punitive damages was not barred or limited by the after-acquired evidence doctrine.

The court, following the reasoning of an earlier appellate decision, distinguished the back pay and front pay damages discussed and limited in the McKennon decision from noneconomic damages, such as emotional distress, as follows:

Unlike wage-based claims, a non-economic loss, such as emotional distress, if proven, relates to injuries that have no direct nexus to a plaintiff's status as an employee. Instead, they embody damages resulting from alleged misconduct of an employer, which, although directed at an employee, is nevertheless subject to redress because of indignities suffered, not because of the person's status as an employee. An employer who creates a hostile work environment should not be excused from responding in damages for personal injuries caused by its discriminatory conduct simply because it later learns that the injured employee did something in the past, which, if known at the time, would have caused his or her termination. The same rationale applies to claims for punitive damages, which are intended to deter especially egregious conduct, such as actual participation by upper management or willful indifference.

The court reasoned that there would be "abhorrent results" were the after-acquired evidence doctrine to bar emotional distress or punitive damages: "acts that our statutes condemn would be permitted; discriminatory behaviors, however vile and reprehensible, would go unpunished; victims of severe or pervasive discriminatory conduct or workplace harassment would be turned away from our courthouses without any avenue of redress."?

Practical Significance

Thus it is unlikely that the after-acquired evidence doctrine will bar emotional distress and punitive damages claims for workplace discrimination. The reasoning employed by the court in ?Cocchetti may also be relevant in the context of other torts, such as interference with contract or breach of the implied covenant of good faith and fair dealing. Employers should not anticipate that the after-acquired evidence doctrine will limit emotional distress or punitive damages in connection with other tort claims. The New Jersey decision therefore heightens the importance of employer awareness and training to minimize the risk attendant on hostile work environment claims and to maintain a workplace that is free from unlawful discrimination.


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