It is generally understood that employees can bring Title VII claims – and be awarded damages – for hostile environment, wrongful termination, and retaliation. What is less clearly understood is the extent of the economic damages for which a former employer may be liable in the situation in which a litigant claims to have lost a job opportunity because of a retaliatory action on the part of that former employer. The 5th U.S. Circuit Court of Appeals recently answered that question by quoting the wording of Title VII, and holding that the law “does not require that the employer liable for back pay be the same entity for whom the plaintiff would have worked had he not suffered unlawful retaliation.” Nassar v. Univ. of Texas Southwestern Medical Center at Dallas, 5th Cir., No. 11-10338, 3/8/12.

Naiel Nassar, a U.S. citizen since 1990, was born in Egypt and attended medical school there. He subsequently did a medical residency and a fellowship in infectious diseases at the University of California, Davis. In 2001, Nassar was hired by the University of Texas Southwestern Medical Center (UTSW) as an Assistant Professor of infectious disease medicine. Part of Nassar’s duties required that he provide patient care at Parkland Hospital’s Amelia Court clinic, an outpatient HIV/AIDS clinic affiliated with UTSW.

In 2004, UTSW hired Dr. Beth Levine as the chief of its infectious disease program. In that role, Levine directed that Nassar begin billing for the services he provided to the HIV clinic. Nassar objected to the directive, arguing that his salary for clinical services was fully funded by a federal grant, and stating that billing the patients therefore would be “double dipping.” Nassar claimed that Levine then began to “harass” him, making derogatory statement about his race and his Muslim religion, including one comment that “middle easterners were lazy.” His allegations were supported by a clinical supervisor, whose affidavit described a “disconnect between Dr. Levine’s [derogatory] statements and the reality of Dr. Nassar’s work.” Based on his concerns about Levine, Nassar ultimately applied for direct employment by Parkland Health & Hospital System in 2006. Parkland made preparations to hire Nassar, drafting a letter offering a staff physician job to Nassar. However, the offer was later withdrawn. Nassar contended – and testimony supported the claim – that UTSW retaliated against him by blocking the offer from Parkland because Nassar stated in his resignation letter that his primary reason for leaving UTSW was Levine’s harassment and discriminatory comments. Nassar ultimately accepted a job in a smaller clinic in Fresno, California, and filed a lawsuit against UTSW in federal court alleging discrimination/constructive discharge and retaliation.

At trial, the jury was presented with only two questions: (1) Whether Nassar was constructively discharged because of his race, national origin, or religious preference; and (2) Whether UTSW retaliated against Nassar by blocking or objecting to his employment by Parkland after Nassar complained about his treatment at UTSW. After one hour of deliberations, the jury answered “Yes” to both questions. Two days after the May 24, 2010 verdict, the same jury awarded $3.2 Million in compensatory damages and $438,000 in lost back pay to Nassar. The trial court reduced the compensatory damage award to $300,000 under the Title VII damage cap, but added nearly $500,000 in attorney fees and costs to Nassar’s award. Both sides appealed the awards.

Upon review, the Fifth Circuit reversed the verdict against UTSW on Nassar’s constructive discharge claim, holding that while the evidence that Nassar provided to the jury may have supported a claim of hostile environment, that evidence did not rise to the level of egregious conduct necessary to support a claim of constructive discharge. However, the Court upheld the jury’s verdict on the retaliation claim, and further upheld the method used by the jury to calculate Nassar’s lost income.

While UTSW argued that Nassar’s lost income should have been the difference between that which he was earning at UTSW ($166,395 as an Assistant Professor) and his subsequent compensation in California (which varied from $165,000 to $180,000 a year, including benefits), the district court allowed the jury to calculate the lost pay by comparing Nassar’s prospective income from Parkland ($240,500 a year, including benefits) to the amount that he was earning in California. Using that method, the jury awarded Nassar $436,167.66 in lost back pay. The Fifth Circuit upheld that award because it made Nassar whole by placing him in the position that he would have been in “but for” the retaliation.

This case is a strong reminder that unlawful retaliation can take the form of a former employer preventing an individual from getting a job with another employer. Under Title VII, lost income is payable by the employer responsible for the unlawful employment practice, and may be calculated as the difference between the individual’s former pay, and that which he would have earned had the retaliation not occurred.  If, as in this case, evidence indicates that the retaliation kept the individual from moving to a more highly lucrative position, the former employer risks being liable for the loss of a substantially higher wage.

In addition, employers – especially hospital and healthcare entities that are contemplating direct hiring of physicians – should understand that an employee, or former employee, can successfully prove retaliation without having successfully proven discrimination or a constructive discharge claim, and that damages for lost pay and benefits for highly compensated individuals can be substantial.