Most Employment Discrimination Lawsuits Don’t Net Much Money

Every once in a while, you’ll hear about a lawsuit against a huge employer for some form of employment discrimination. These sensational cases typically allege a long pattern of discrimination, mandated (or at least tacitly endorsed) by top management, all the way down the chain of command. They might involve hundreds, if not thousands, of plaintiffs. Sometimes, you even hear about multimillion dollar settlements or jury awards.

However, these types of cases are extremely rare, considering the number of employment discrimination suits filed across the country every year. The vast majority of job-discrimination complaints are brought by individuals who cannot afford high-powered class-action attorneys.

Indeed, only a miniscule fraction of job-discrimination lawsuits ever make the news, and a similarly small proportion of them ever go to trial. In general, employers will do almost anything to avoid taking an employment discrimination case to trial, not only to avoid the time and money that it costs, but also to avoid the negative publicity, and to take the factor of unpredictable jury awards out of the equation.

Accordingly, employers typically do everything they can to have these cases dismissed as soon as possible. Failing that, they typically offer modest settlements, most of which are accepted by the plaintiffs. However, according to a recent article in the ABA Journal, these settlements tend to be smaller than most people might expect.

That article refers to a study conducted by the American Bar Foundation, looking at federal employment discrimination filings from 1987 to 2003. In addition to the small settlements, the study found that only 6 percent of these cases ever go to trial. Of the cases that make it to trial, only 1/3 of plaintiffs are successful.

Therefore, it makes sense that most plaintiffs, especially if they’re represented by a competent employment litigation attorney (who would be aware of their chances of success at trial), would advise them of the likely outcomes.

But why do employment-discrimination lawsuits have such a low success rate? Well, there are a lot of reasons. First, and perhaps most obviously, employers can usually afford better lawyers than employees, who may not be able to afford lawyers at all, and will therefore have to represent themselves, rely on scarce legal aid resources, or find a lawyer willing to represent them on a contingency basis (taking as payment a portion of the settlement or jury award).

Also, in job discrimination cases, the odds are generally stacked against the employee from the start. This is not necessarily a bad thing. After all, in every other civil action, the burden of proof is on the plaintiff, and so it should be in employment cases.

Furthermore, the simple nature of the employer/employee relationship makes proving discrimination difficult. In the absence of a contract to the contrary, employees and employers are governed by the principle of “at-will” employment. This means that the employee can quit at any time, for any reason (or no reason at all). Conversely, the employer can fire the employee at any time for any reason, or no reason. Of course, laws against discrimination serve as exceptions to this general rule: under federal law you can fire an employee for any reason, as long as your reason isn’t solely the employee’s race, color, religion, national origin, or sex. In addition, many states have additional protected classifications, such as sexual orientation, gender identity, and political views.

So, if you’re fired and believe that it was for a prohibited reason, you essentially have to prove what your employer was thinking when he or she fired you. Obviously, this is no easy task.

Because there isn’t a mind-reading machine in every courtroom (if any scientists are reading, get to work on this right away; cancer will be here when you get back), courts have come up with certain sets of facts that an employee must prove to create the inference that employment discrimination occurred.

First, they have to show that they were not hired for, or were fired from, a certain job. Second, they have to show that they were objectively qualified for the job (they had the necessary skills, education, and experience to perform the tasks in the job description). Third, they must show that the position remained open after they were terminated, or not hired, and was eventually filled by someone of a different race, religion, national origin, or whatever other category the alleged discrimination is based on, and that the replacement was not more qualified than the plaintiff.

However, if the plaintiff proves all of these facts, they have not won the case. All they’ve done is raised a “prima facie” case of employment discrimination – these facts, on their face, create a presumption that discrimination has occurred.

At this point, the burden of proof shifts to the employer. To prevail at this stage, they have to prove that they had a legitimate, non-discriminatory reason for their hiring or firing decision. This reason can be just about anything, but they do have to prove that it existed.

If the employer proves those facts, the burden once again shifts to the employee, who has to prove that the employer’s “legitimate” reason for terminating them is merely a pretext for discrimination.

Finally, if the employee proves all of those facts, he or she wins the case. However, if they fail to prove a single one of those facts, they will lose. Obviously, given the number of moving parts involved in making an employment discrimination case, there are many possible points of failure.

Furthermore, the fact that only 1/3 of discrimination suits that go to trial are successful may simply illustrate that most job discrimination suits are without merit. Or, at the very least, that employers who want to discriminate based on race have gotten very savvy at keeping business records which give them plausible deniability.

Obviously, one should hope that the former is true, and not the latter. If very few employment discrimination suits have merit, that would mean that employment discrimination is not terribly widespread. Obviously, that would be a good thing.

On the other hand, the possibility of the second explanation, that employers who want to discriminate based on race have gotten good at hiding it, is quite disturbing. If true, this might mean that employment discrimination is far more widespread than most people suspect.

Obviously, there’s no way to know for sure what explanation is the correct one, and it could be a combination of the two (actual employment discrimination is rare, and employers that do discriminate are good at hiding it).

Whatever the cause of this low success rate, it’s no wonder why so many of these cases settle before they get anywhere near the trial stage. If a competent employment attorney advises his or her client on the chances of success at trial, most will not be willing to roll the dice.

It’s true that a jury might award the victim of employment discrimination a huge sum of money, much greater than any settlement that any defendant would ever offer. However, the chances are much greater that the jury will rule against them, or award them a small sum. Therefore, many plaintiffs might jump at a relatively small settlement, simply to get some compensation for the wrong (or perceived wrong) they have suffered, and move on with their lives.

It’s possible that this state of affairs leads to many people with legitimate discrimination claims settling for small amounts of money. However, under the current at-will employment system, not much can be done to change that. Some have suggested doing away with at-will employment altogether, especially considering the fact that the rule has been chipped away to the point that it largely serves as a preamble to its exceptions.

However, most people agree that it’s wrong for employers to discriminate, and even in an at-will system, there are certain grounds for termination which are simply unacceptable. Racial, religious, and gender discrimination are among them. At-will employment, which necessarily creates a system where the firing of an employee is presumed to be justified, means that discrimination is extremely difficult to prove, even when it takes place.

Unfortunately for the legitimate victims of discrimination, this is the system we’ve chosen, and, as always, there are tradeoffs.

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9 Responses to “Most Employment Discrimination Lawsuits Don’t Net Much Money”


  1. 1 Brittany Cabbagestalk

    If companies hide discrimination so well why do they tend to settle out of court with the plaintiff?

  2. 2 Ben

    Instead of being mind readers, why don’t we just walk around with our phones on voice record. It’s a good thing my “so called boss” said ” It’s my company, I can do whatever”. Right before he gave my job to another caucasion guy, right in front of his secretary, and another employee.After I had been there for two years. He didn’t have more experience than me, and I had never been diciplined about anything about my job. He had no explanation why he had done what he did. It was the Christmas holiday, and I had just moved my family into a bigger place, anticipating that I would have a job since they don’t lay off. That was December 2oth of 2010. I am still unemployed. They also tried to deny my unemployment. Maybe some have no merit, and just want money. What’s the price if someone had done that to you? I was devistated for months….then very upset….money never came to mind, just the question of WHY?.. and what the hell am I going to do now.

  3. 3 Juan

    BEN;
    Let me tell you something. I went through the same thing like you. But I started fighting from the very begining. My Unemployment benefits was denied but I appeal9The first time was denied, but I went to the second appeal in person and I WON. After that I filed an Appeal with the Civil Right Commission in my State and I won. So, you have to believe in AMERICAN JUSTICE SYSTEM. The Civil Rights Commission HELP people with no money. GOOD LUCK

  4. 4 Linda

    I am in a lawsuit with an employer in florida now. It is almost 2 years even with a lawyer. I had to go to a predisposition meeting . I was interegated by their lawyer for 4 hours. Now I have to go back in September this time not to talk but to listen. I dont know if there is a chance of a settlement noone has said one way or the other. They tried to fight me in getting unemployment too. I worked for them for over 3 years. They just got rid of 2 more people before me with higher senority all of us are in the baby boomer generation. That is why a lot of people dont respect the state of Florida, they will stick up for the employer no matter what. Thats why they are known as the wimp state.

  5. 5 Tara

    I am considering filing an employee discrimination case. I am a woman whose work was given over to a new male employee, after I had been the only woman in that dept. for 10 yrs, with above average raises each year & lots of praise from some of my bosses. I had experience in 2 separate depts. at this company. I heard a rumor that I wouldn’t be considered for a position opening up soon in another dept. that I had experience in and was qualified for, due to my appearance (I was grossly overweight at that time). There is a law in my state regarding employee discrimination for being overweight. I was also told by an insider that the company wouldn’t consider me for this position opening up, because they were looking for a young girl. I am 47. The office manager allegedly said, “How can I put her up front?” – in this position. I am hoping that with these three issues and the testimony of another employee that I might have a case. I really hate the thought of putting this person in the middle. I have been unemployed for over a year now, not being able to find work equal to either position. I felt betrayed and abandoned by my work “family” when they let me go. They said I didn’t do anything wrong, but that my position had been phased out. I still have friends at this company and am worried about pursuing a case. But, I feel desperate at this point. I hope I have a chance.

  6. 6 Liz

    Both my lawyer and I have filed a lawsuit with the United States District Court for the Northern District of Texas against Averitt Express in Dallas, Texas for sex discrimination. We are urging others to come forward so that this does not happen to anyone else. Please contact us if you or anyone you know has been discriminated by Averitt Express in the workplace.

  7. 7 Tony Rollinson

    I have a law suit against a large trucking company for medical discrimation. This company hired me in 2011 knowing at that time I had had a heart attack and had 4 stents. While as a lease purchace driver for them I had another heart attack in 2012.This company keep sending me e-mails and mail along with phone calls wanting me to return to work.I did call them back and was cleared by my heart DR., passed the dot physical and drug screen. After I had quit a job to return to this company
    and did all that was asked,they refused to hire me because I have had 2 heart attacks and have 6 stents. IS THIS GOING TO BE WORTH MY TIME TO CONTUNIE WITH THIS SUIT??? HOW MUCH CAN I EXPECT TO RECEIVE. THNKS,

  8. 8 Lisa

    @Tara – that is one of the worst stories I’ve heard. And that’s so hard that calling other employees as witnesses is going to put them in jeopardy too!

  9. 9 Concerned

    My former employer had me train another employee. This employee was driving company property and had an accident. I told the employee to start the truck (old truck 45 min. to warm-up) and went to do other things.
    The next thing I heard was yelling the driver hit an old transmission that was next to the truck. Well, to make a long story short, they drug tested me and it was neg. They were not satisified with the results and decided to have me go to the hospital. Well, now we are in fed court (oh, there is a contract) no attorney but at summary judgment stage. Judge will rule shortly.There’s more.

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