Front Pay

What is front pay?

Front pay is compensation awarded to employees who win employment discrimination or retaliation cases. Front pay is money that covers lost compensation: Front pay situations typically include:

• Pay that accumulates from the time the employee brings the employment discrimination case or anti-retaliation case to when they win.
• Pay from the time their case is won until they find a new job.
• Pay due to termination and may compensate an employee for loss of experience, harm to reputation, and other future effects.

The goal of front pay is to financially restore the employee as much as possible for wages lost due to discrimination or retaliation.

Front pay vs. reinstatement

Front pay provides money for past and future lost wages, while reinstatement restores what the employee was previously entitled to as far as job and compensation.

Reinstatement means the employee gets their old job position back without loss of seniority, compensation, or benefits. Reinstatement is when an employee is re-employed by the same employer at the resolution of their case as if they had never been dismissed. The employee should also receive any pay increases or other improvements that would have been applied had they never been dismissed in the first place.

Front pay vs. back pay

While both front pay and back pay provide monetary compensation for employees who have been wrongly dismissed, or forced to leave a role due to discrimination or harassment, there are some key differences. The main difference between front pay and back pay is the period covered.

Back pay

Back pay covers any past losses in income caused to an employee due to unfair dismissal or unlawful actions such as discrimination. It covers lost wages from the time of the employer’s violation up to the point at which either the employee is reinstated or when the case is otherwise resolved.

Front pay

Front pay addresses future income that will be lost when it is not possible to resolve the case by reinstating the employee. It typically covers the period from the resolution of the case until the former employee secures a new position, or at least what is considered a reasonable amount of time for them to secure a new position. This covers what the employee would have earned, including benefits, and is designed to provide financial stability while they seek new employment.

How much front pay can the EEOC award?

The amount of front pay can vary, depending on whether a charge is resolved through an US Equal Employment Opportunity Commission (EEOC) conciliation process with a settlement agreement or if a lawsuit is pursued in court. However, the front pay limits that are listed above still apply.

The EEOC is the organization that investigates filed charges brought by an employee against an employer. After the investigation (which includes gathering information, making on-site visits, and interviewing witnesses), the EEOC will determine if the charges have merit.

If there is reason to believe the charges do have merit, the EEOC may invite all parties to engage in conciliation (mediation) that may result in a settlement. If the conciliation is not successful in resolving the charge, a lawsuit may be filed in federal court.

How to calculate front pay

Front pay is simple to calculate because it is usually based on the employee’s pay rate or salary before the events that led to their termination. Basic front pay compensation awards the employee the amount of money they would have earned if job conditions had been fair and they had remained employed. Employees may also seek and be awarded a dollar amount for lost benefits, such as health insurance costs or company 401(k) matches.

Front pay is designed to compensate employees who have been unfairly dismissed or forced to leave their current role due to factors such as discrimination or workplace harassment. It is calculated by tallying what the employee would have earned had they stayed in that role. This includes loss of future earnings and loss of any benefits they may have received. It may also consider factors such as:

• The employee’s age and expected retirement age
• How long they would have expected to remain in their current role should they not have been dismissed or forced to leave
• The length of time the employee was employed by the defendant before the incident
• The employee’s ability to continue to work
• The estimated length of time it will take the employee to secure another role using reasonable effort
• Efforts to mitigate damages by the employee.

This is by no means an exhaustive list. The actual amount of front pay to be awarded is typically determined by the presiding judge.

Limits to front pay apply to additional damages the employee may seek on top of basic front pay. These types of compensation may include pain and suffering (a payment that compensates the employee for how they were affected emotionally by the termination of their employment) or punitive damages (a payment that punishes the employer for their actions).

The limits on compensatory and punitive damages in discrimination cases depend on the employer’s size:

• 15–100 employees = $50,000
• 101–200 employees = $100,000
• 201–500 employees = $200,000
• 500+ employees = $300,000

Some factors that determine the amount awarded include:

• Age
• Work and life expectancies
• Effort of mitigation taken by employer
• Length of time employed, and length of time employed in lost position
• Employee classification and status
• Likelihood of continued employment absent any discrimination
• Length of time it took to secure comparable employment elsewhere