Punitive damages are damages assessed against an employer in order to punish the defendant for their bad conduct, and to deter future similar conduct.
Since punitive damages are to punish the employer for misconduct, the amount of the damages is determined according to what would have an impact on the business. For example, if a jury assessed $20,000 in punitive damages against Apple, it would be considered very little. However, a $20,000 punitive damage award against a small restaurant might be enough incentive never to be involved in that type of situation again.
Punitive damages are awarded to sexual harassment victims if you can demonstrate that the harassment was perpetrated by a managing agent officer or director of the company. The perpetrator of the harassment needs to be a high-level person – who doesn’t have to be the CEO – but someone with substantial control of some part of the company. If you can demonstrate harassment by that type of person, the jury will consider whether you should win punitive damages.
However, it’s a two-step process with punitive damages. In the first phase, the jury will decide whether there’s liability. They will decide if the plaintiff wins, what the damages for emotional distress and economic loss should be. And then last, the jury will determine whether the award of punitive damages have been met. Meaning, has the plaintiff shown that the managing agent, officer, or director of the company acted inappropriately, with malice, oppression or fraud, and violated the plaintiff’s rights?
If the jury determines that the plaintiff did act inappropriately, there’s a second phase where you put on evidence concerning the defendant’s net worth, and you then get to tell the jury, the corporation’s net worth and that the CEO probably has a substantial net worth as well. Then, the jury decides, based on the evidence, whether any conduct in question justifies an award. There are constitutional limits on how much punishment the jury can dole out for punitive damages. But yes, it’s definitely a valuable remedy for plaintiffs in a harassment case.