Whether victims of employment discrimination are entitled to pre-determination interest on back pay awards.

Yes. Although pre-determination interest does not have to be awarded as a matter of law in every case, the Commissioner of the New York State Division of Human Rights is afforded some discretion, subject to appellate review, to award payment of predetermination interest to victims of employment discrimination.

Petitioner prevailed in a Human Rights Law (Executive Law, Article 15) employment discrimination claim against Respondent, her former employer. After the finding of discrimination, the Commissioner of the New York State Division of Human Rights awarded Petitioner back pay with interest accruing from the date of the final order, but denied Petitioner's request for pre-determination interest that accrued during the eleven years between the date of the discrimination and the date of the final order. Pursuant to Executive Law § 298, Petitioner brought a proceeding to challenge the Commissioner's refusal to award pre-determination interest. The Appellate Division confirmed the determination, holding that the Commissioner had acted within his discretion in denying Petitioner's request.

The Court of Appeals reversed. The Court first noted that federal case law in this area provides some guidance in resolving the pre-determination interest issue, because the Human Rights Law and Title VII of the Civil Rights Act of 1964 (42 U.S.C. § 2000e) address the same type of discrimination, afford victims similar forms of redress, are textually similar, and ultimately employ the same standards of recovery. The Court went on to observe that the federal courts have held that pre-determination interest is "an essential accompaniment to back pay awards" (see Loeffler v. Frank, 486 U.S. 549, 557-58 (1988)) and "to the extent that damages awarded to the plaintiff represent compensation for lost wages, 'it is ordinarily an abuse of discretion not to include pre-judgment interest'" (see Gierlinger v. Gleason, 160 F.3d 858 (2d Cir. 1998)). Although the Human Rights Law, like Title VII, does not make specific reference to pre-determination interest, the Court stated that a liberal reading of the statute is explicitly mandated to effectuate the legislature's intent.

The Court then noted that awarding pre-determination interest is consistent with the Human Rights Law's central concern of making victims of discrimination whole. Respondent argued that if it were forced to pay pre-determination interest it, in effect, would be penalized for the Division's inefficiency. In rejecting this argument, the Court stated that awarding interest is not a penalty, but rather a means of indemnifying an aggrieved person, and that the denial of pre-determination interest in this case would be the equivalent of giving an interest-free loan to Respondent. The Court tempered its holding by rejecting Petitioner's argument that pre-determination interest must be awarded in every case as a matter of law. Instead, the Court found that Commissioner of the Division of Human Rights has some discretion, subject to appellate review for abuse, in determining the extent of appropriate compensation for violations of the Human Rights Law. Here, the Court concluded that neither the Commissioner nor the Appellate Division offered any justification for the denial of pre-determination interest, and therefore the denial constituted an abuse of discretion.