The Michigan Supreme Court has clarified the scope of a discharged employee's duty to mitigate damages for lost wages. The doctrine of mitigation imposes two obligations on a discharged employee: (1) to make reasonable efforts to find employment and (2) to accept employment of a "like nature," if offered.
The first obligation requires an employee to make efforts that are "reasonable under the circumstances" to find other employment. Thus, a discharged employee may not purposefully remain unemployed or underemployed to maximize damages. An employee who makes reasonable efforts to find other employment will not be denied damages for lost wages merely because his or her efforts were unsuccessful and even if the efforts could have been "more exhaustive."
The employee's second obligation is to accept other employment that is "substantially similar to that from which [he] was fired." If he does not, he will lose back pay damages from the date of rejection. However, the employee may reject employment that he or she finds "demeaning, particularly inconvenient, or otherwise unacceptable."
In Morris v Clawson Tank Co the court clarified that these two obligations are separate and distinct: an employee is not required to seek employment that is similar to the job held at the time of discharge; he only is required to seek other employment. An employee also is not precluded from obtaining damages for lost wages simply because his subsequent employment pays less or involves less desirable work or working conditions.
The Morris case involved a 22-year old general laborer who was discharged after nine months employment following a non-job-related accident that resulted in his losing one eye in August 1989.
He was released to return to work in September 1989, but his employer declined to reinstate him, saying it did not wish to endanger his remaining eye.
The employee filed a grievance over his discharge which culminated in an arbitration award that called for his reinstatement if reinstatement would not displace a more senior employee. The employer claimed it had no such jobs and refused to reinstate the employee. The employee then sued to enforce the arbitration award and for disability discrimination.
The trial court decided the employer had discriminated against the employee and awarded him damages for back pay (i.e., from date of discharge to date of verdict) and front pay (i.e., from date of verdict forward). The employer appealed only the amount of damages, not the finding of discrimination.
The court reviewed the employee's post-discharge job history. The employee had received disability benefits for four months following his employer's refusal to reinstate him. He then obtained a temporary janitor job that paid less than his laborer job. After that he obtained a seasonal landscaping job that also paid less than his former job. After that, he essentially stopped looking for other work, however, he often worked more than 40 hours per week and worked at odd jobs during the off-season. In September and October 1992, the employer offered to reinstate the employee. He did not respond to either offer. In February 1993, three and one-half years after his injury, the employee accepted a full-time job as a janitor, earning four cents more per hour than his laborer job.
The supreme court affirmed the trial court's ruling that the employee had met his duty of making reasonable efforts to find employment. He had applied for employment in various areas and obtained several jobs, even though none were of a similar nature.
The court affirmed the trial court's ruling that the employee was entitled to back pay during the period he received disability benefits. The court ruled that it was "inappropriate to infer" from the employee's receipt of disability benefits that he was "unable to work" and therefore not covered by the Persons With Disabilities Act during such period. However, the amount of back pay for this period was appropriately reduced by the amount of disability benefits the employee received.
The court decided that the employee's job search efforts after he obtained the seasonal job were not unreasonable, noting the employee often worked more than 40 hours per week and picked up at least one short-term job in the off-season.
The court sent the case back to the trial court for further factual findings on the reasonableness of the employee's not responding to the two offers of reinstatement made by the employer in September and October 1992. The trial court had ruled that the offers were "patently unreasonable" because of the lapse of time between the employee's discharge and the offers. The supreme court ruled that the length of time, alone, was not sufficient to render the offers unreasonable. The questions for the trial court were: whether the offers were legitimate, unconditional offers of like employment (as opposed to merely a trial tactic) and whether the employee's rejection was unreasonable. If the offers were legitimate and the rejection unreasonable, the employee would not be entitled to damages for lost wages after the date he rejected the offers.
Finally, the court ruled, without discussion, that the employee was not necessarily precluded from obtaining damages for the period after he obtained the full-time janitor job. In a separate, concurring opinion, Justice Weaver criticized the majority for not more clearly elucidating the parameters of front pay. She noted that the front pay award in this case presumed that the employee, who was only 22 years old and had worked for the employer for only nine months at the time of his injury, would have remained with this employer until he retired at age 62. It also assumed that he would remain at the full-time janitor job held at the time of trial for the balance of his working life, as the front pay award was based on the projected difference in future earnings between these two jobs.
This case provides several lessons. First, fear of future injury is not a legitimate, non-discriminatory reason to discharge or decline to hire an employee. Second, an employee's receipt of disability benefits is not determinative of his ability to work for purposes of the Persons With Disabilities Act. An employee may recover damages for disability discrimination, even for periods during which he receives disability benefits. Third, a discharged employee is not required to look for comparable employment to satisfy his duty to mitigate damages. He merely must make a good faith effort to seek other employment. Fourth, an offer of reinstatement must be unconditional and must be for a substantially similar job to cut off an employee's entitlement to damages for lost wages. Fifth, front pay damages may be payable for an employee's entire projected work life.