Laws that apply to liability lawsuits are changing

Arkansas employers have reason to breathe a sigh of relief. Twenty-four years after the passage of the Arkansas Civil Rights Act, the General Assembly has finally closed some significant loopholes in the law’s employment discrimination provisions.

On Feb. 17, Gov. Asa Hutchinson signed Act 191 of the 91st General Assembly. Sponsored by Rep. Charlie Collins, R-Fayetteville, the new law makes two important changes of note for employers.

First, individual supervisor liability under the legislation has been eliminated, reversing a 2010 decision by the Arkansas Supreme Court that allowed individuals to be personally sued for retaliation. No longer will supervisors and human resources managers face potentially unlimited personal liability or have to defend themselves in a lawsuit for an employment decision they made on behalf of their employer. Not only should this be welcome news for those supervisors and managers, but the change also means out-of-state companies doing business in Arkansas can have their cases heard in federal court.

By naming an individual supervisor alongside the employer, plaintiffs were able to deny an out-of-state company their right to remove a case to federal court on the basis of diversity jurisdiction. Without the individual supervisor in the case, the right to remove to federal court should be restored in most cases involving out-of-state employers. Most employment discrimination cases are heard in federal court, making those courts better informed and more equipped to handle the cases.

The second change ensures all claims against an employer — whether for harassment, discrimination or retaliation — will be subject to the same rules. All claims will be subject to the same limitations period, typically one year, as opposed to the varying limitations periods that previously applied. In addition, retaliation and harassment claims will be subject to the same sliding scale of damages caps that has always applied to discrimination claims.

For the smallest of employers in Arkansas – those with less than 15 in-state employees – liability for compensatory and punitive damages will be capped at $15,000. For larger employers — those with more than 500 in-state employees — those damages will be capped at $300,000.

The rules for former employees claiming harassment or discrimination to seeking back pay, non-monetary restitution and attorney’s fees and costs is unchanged. However, employers will no longer face potentially unlimited liability for retaliation and harassment claims under the law.

As the bill’s sponsor expressed to the House Judiciary Committee, the intent of the changes is not to take away an employee’s ability to make a claim, but rather to make the rules and procedures uniform and to ensure that the damages caps are being applied uniformly. So while the rules that apply to lawsuits may be changing, employers will still face potential liability for discrimination, harassment and retaliation in their workplaces. Thus, employers should remain vigilant in their efforts to promote equal employment opportunity in the workplace.

These important changes will go into effect on the 91st day after the General Assembly adjourns. While that is still a few months away at this point, it is nice to know that, after 24 years, the wait is almost over.
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Editor’s note: Eva Madison is a shareholder at Littler Mendelson’s Fayetteville office where she counsels employers on discrimination and harassment, wage and hour disputes and employment litigation. She is an adjunct professor at the University of Arkansas School of Law, where she teaches a course on employment discrimination. The opinions expressed are those of the author.