Mr. Timothy Wodarck sued his former employer, Lakota, Inc. for wrongful termination. A jury agreed with Mr. Wodarck and awarded him $31,236.26 in past wage loss, $145,600 in future lost earning capacity, no compensatory damages, and no compensation for unlawful deduction from wages due or earned. On a post-verdict motion for judgment as a matter of law, the district court vacated the award of $145,600, determining that the evidence at trial did not support an award for “lost earning capacity.”
The Court of Appeals reasoned that both Wodark and Lakota “conflated two distinct categories of damages,” front pay and lost earning capacity.
As the Minnesota Supreme Court held in Ray v. Miller Meester Advert., Inc., 684 N.W.2d 404, 406 (Minn. 2004), in employment contracts, the general rule in Minnesota is that “the measure of damages for breach of an employment contract is the compensation which an employee who has been wrongfully discharged would have received had the contract been carried out according to its terms.”
However, a court may award future damages, or front pay, for lost compensation that occurs after the time of trial. The potentially speculative nature of front pay awards is limited by the plaintiff’s duty to mitigate damages, the evidence presented concerning the extent of the potential damages, and the principle that front pay awards are limited to the damages caused by the breach of contract.
Lost Earning Capacity
Lost earning capacity, on the other hand, is most often considered in personal injury cases (and not in wrongful termination cases). In a nutshell, if one negligently crushes the finger of a renowned concert pianist, it is highly probable if not self-evident that the pianist’s future income stream will have been badly diminished. Under such circumstances, an award for lost earning capacity is critical if the goal is to make the tort victim “whole.”
After noting the distinction, the Court of Appeals affirmed the trial court’s ruling that “Wodarck obtained comparable employment following his termination from Lakota, which indicates that his earning capacity was not adversely impacted by his termination from Lakota.”
The Court of Appeals was unpersuaded by the evidence that Mr. Wodarck was fired from the “comparable employment” because someone from Lakota called up the new employer and “made derogatory comments about him” (here at p. 6). That fact, the court held, is “not relevant to Wodarck’s claims for unlawful termination and thus cannot support a front pay claim.”
In hindsight, perhaps Wodarck coulda/shoulda/woulda brought a claim for tortious interference with contract or perhaps defamation in connection with the alleged derogatory call to his new employer. This is a case of 20/20 hindsight, however, and there are far too many variables in U.S. civil litigation to apply such a standard on strategic decisions made along the way…