A federal circuit court has reminded employers once again that merely having a written policy against discrimination in a widely distributed employee handbook is not enough by itself to protect an employer from punitive damages by overcoming a charge of malice or reckless indifference.

In Golson v. Green Tree Fin. Servicing Corp., decided on January 10, 2002, a jury found that an employer had discriminated against a woman under Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e(k) by virtue of her pregnancy. The company had an employee manual that contained an "Equal Employment Policy" that provided that the company did not discriminate on the grounds of race, sex, national origin or religion. It did not specifically mention pregnancy, but such discrimination is a form of sexual discrimination. The manual encouraged employees to report immediately any type of discrimination. However, said the court in affirming the verdict for back pay, compensatory damages and punitive damages, the mere existence of an antidiscrimination policy does not automatically satisfy the good faith requirement, and so the jury was entitled to find that the company had acted in bad faith. The court noted that the company did not have a program to train and educate its employees in order to implement and enforce its policies, no matter how widely the policy was disseminated. Moreover, the company did not notify employees specifically that pregnancy is a form of sexual discrimination.

There are clear lessons to learn from this decision. Employers ought to regularly conduct training and education programs for their employees and make a record of employee attendance at such sessions, to demonstrate that the company is making every reasonable good faith effort to achieve compliance. This will defeat not only a claim for punitive damages; it goes a long way to defeat any claim of discrimination. An employer is not liable vicariously for the discriminatory employment actions of its supervisory agents if their decisions are contrary to the employer's good faith efforts to comply with the law and to provide an avenue of redress to employees.

Another lesson is that an employer cannot be too specific in defining the forms of discrimination that are prohibited. The fact that pregnancy is a form of sexual discrimination may not be self evident and it should be expressly included in the policy, just as sexual harassment, harassing emails, etc. are to be include.