Businesses Are Upset by Bill on Civil Rights : Workplace: Companies fear the prospect of unfair rulings when the President signs the recently passed legislation.

By passing a major bill that makes it easier for victims of job discrimination nationally to sue and collect damages, the House last week ended two years of heated congressional debate over civil rights law.

However, much of the nation’s business community contends that the debate is about to begin anew in the nation’s courts with one major difference--the arguments will now be decided by juries who tend to be more sympathetic toward plaintiffs.

President Bush is expected to sign the bill later this month. It would expand the rights of women and the disabled by allowing them to collect punitive and compensatory damages in discrimination cases and to stand trial before juries. Such cases are now heard by judges, and plaintiffs can collect only back pay and attorney fees.

The law would have little legal impact in California, Michigan, Iowa and Massachusetts, because those states already have clearly defined laws allowing plaintiffs in job discrimination cases to seek jury trials and punitive and compensatory damages.

But in the vast majority of states that do not have such statutes, the system for resolving job disputes will change dramatically.

“We’re very concerned about trials in employment discrimination cases because of the way juries have handled individual grievances against companies,” said Nancy Fulco, a labor lawyer for the U.S. Chamber of Commerce. “Look at medical malpractice--some jury findings and awards for plaintiffs are just crazy.”

Proponents say provisions of the bill--passed by the Senate earlier this month--are not strong enough, but they contend that the measure will help them fight employment-related discrimination. Opponents say the provisions are drastic, predicting that businesses now face the prospect of unfair rulings or excessive penalties.

Such discrimination cases would be subject to dollar limits on awards, ranging from $50,000 to $300,000, depending on the size of the company. Victims of racial discrimination face no such limits.

Fulco said the chamber, which represents 180 companies, would be less alarmed if judges determined awards. But she said the chamber fears that Congress will soon pass legislation removing the caps.

“Penalties could be applied without adding the uncertainty of jury verdicts,” Fulco said.

Although the direct legal impact would be negligible in California, some defenders of corporate personnel practices say the new law would raise the consciousness of the disabled, prompting some suits that will raise the cost of doing business in the state.

Companies fear that many juries will easily sympathize with disabled plaintiffs in unjustifiable suits, said William S. Waldo, an attorney who has represented defendants in discrimination suits.

“A disabled person,” Waldo said, “is a very attractive plaintiff who can present a positive image of someone who wants to overcome a physical disability and work. Meanwhile, the attorney can portray companies (defendants) as trying to prevent plaintiffs from improving their lives. That will be very tough for companies.”

Waldo said such suits could create a special problem in California, creating additional litigation expense for companies already burdened with rising state business costs such as high taxes, heavy regulation and expensive workers’ compensation costs.

“The jury system is a way of redistributing wealth,” Waldo said, contending that jurors from the work force favor other workers. “It’s unfair because you have employees judging employees.”

However, supporters of the bill bristle at those claims.

“That’s a red herring because cases will be heard on the merits,” said Patrishia Wright, director of government affairs for the Disability Rights Education & Defense Fund, a Washington-based lobby group.

“The new law will provide . . . a remedy to discrimination,” she said. “The standards for accommodating the physical needs of disabled employees are flexible. The law doesn’t apply if it creates undue (financial) hardship for a company. . . . The law encourages a company to settle a problem. If an employer is unwilling to settle, it will provide for damages.”

Advocates of womens’ employment rights are not totally satisfied with the bill but support its passage, said Marcia Greenberger, co-president of the Washington-based National Women’s Law Center, a private, nonprofit legal group.

“We will support legislation that will take off caps off damages, but this is a step forward,” she said. “Some companies have arbitrary hiring requirements aimed at women--such as height and weight requirements. . . . Hopefully, many companies will begin to review their employment practices to ensure they comply with the laws.”

Such a review is under way at many companies, but executives are not sure how to comply because Congress did not adequately define discrimination, said Terry Smith, a spokesman for the Washington-based National Federation of Independent Business.

“Many companies are calling us and asking how they should comply,” Smith said. “We would love to provide that information but . . . Congress didn’t tighten up the (civil rights) language for the courts. We’ll get regulation by guinea pig. Hundreds of businesses may end up as court test cases because Congress didn’t clarify the language.”

The bill negates a series of Supreme Court rulings that had increased the burden of proof on plaintiffs in job discrimination cases. The debate in Congress was marked by outrage over a provision added in the Senate that exempts from the bill plaintiffs central to those Supreme Court rulings--about 2,000 Asian-American and other minority employees of an Alaska salmon cannery owned by the Seattle-based Wards Cove Packing Co.

The Wards Cove case involved how employers can justify practices such as physical tests and academic requirements that are fair on their face but result in an adverse impact on a specific group of people. Wards Cove allegedly used a high school diploma requirement to turn away job applicants.

Before the Wards Cove ruling, employers being sued had to prove that such tests and requirements were needed for business reasons. However, the ruling reversed that, forcing plaintiffs to prove that hiring or promotion standards were not business necessities.

The civil rights bill was proposed primarily to negate the Wards Cove ruling and others that made it harder for those alleging job discrimination to win lawsuits. Provisions allowing jury trials and punitive and compensatory damages for women and the disabled were also added.

The change comes too late for Nancy Phillips, who was fired after she told her employer that she was pregnant. Phillips was an inventory worker for Service News Co., a Wilmington, N.C., distributor of periodicals and books. The company said she would have been unable to do the job without injuring herself.

Phillips lost her medical insurance after the termination. She was unable to pay for her medical bills and incurred legal expenses when she was successfully sued by a hospital for the bills.

The U.S. Circuit Court of Appeals in Richmond, Va., last year ruled that Phillips was a victim of illegal sex discrimination. She was awarded back pay and compensated for medical costs but recovered nothing for stress caused by her financial difficulties.

However, the new law may help a woman in the San Francisco Bay Area. The woman, who desires anonymity because her case is pending, claimed that her employer violated a state law by refusing to allow her an unpaid four-month pregnancy leave.

Her legal defenders, the nonprofit San Francisco-based Employment Law Center, filed suit in state court. However, the judge transferred the case to federal court earlier this year, said Patricia Shiu, the woman’s attorney. The plaintiff would not have had the right to a jury trial or to punitive damages in federal court under the old law. Now, that has changed.

John True, another attorney at the Employment Law Center, contends that the new law will be a boon for those seeking redress for discrimination on the job but of less value to those claiming hiring bias.

However, Michael E. Baroody, a senior vice president with the National Assn. of Manufacturers, said the new law will creates a chilling, adversarial environment at a time that many industries are stepping up efforts to hire more minorities, women and the disabled. Companies are also devoting more attention to “managing diversity” in the workplace, he said.

Major Provisions of the Civil Rights Bill The legislation makes it easier for certain workers to sue their employers over alleged job discrimination by shifting the legal burden of proof to the employer, negating a 1989 U.S. Supreme Court decision that had shifted the burden to plaintiffs.

The bill gives women and the disabled the right to a jury trial for discrimination complaints. In the past, such cases had been decided by a judge. Racial minorities already have the right to jury trials.

The legislation gives women and the disabled the right to sue for punitive and compensatory damages. However, there will be a cap on such damages. Previously, women could collect only back pay and there were no compensation guarantees for the disabled in such cases.