NJ Appeals Court Holds Unemployment Benefits Don’t Reduce Employment Discrimination Damages

Last month, the New Jersey State Appellate Division, in the case of Acevedo v. Flightsafety International, Inc., held that unemployment benefits received by a former employee cannot be used to reduce the amount of back pay the employee recovers in a suit for employment discrimination.

The plaintiff, Rex Fornaro, was a flight instructor who worked for Flightsafey International, Inc., a flight training school. At trial, the jury found that Flightsafety fired Fornaro because he is disabled and because he requested reasonable accommodation for his disability. The jury awarded Fornaro back pay of about $83,000, but the trial judge reduced the award by $14,000, which represents one half of the unemployment compensation Fornaro had received since his termination. The trial judge reasoned that because both Fornaro and Flightsafety had contributed to the state unemployment fund, reduction by half was the equitable result.

Fornaro appealed, arguing that the trial court should not have reduced the damages at all, and Flightsafety cross-appealed, arguing that the damages should be reduced by the entire amount of the unemployment compensation.

The three-judge Appellate Division panel reversed the trial court and reinstated the full jury award to Fornaro. The court held that New Jersey’s collateral source statute (N.J.S.A. 2A:15-97), which requires that damages be reduced in some cases where the plaintiff has already received compensation from another “collateral” source, was intended to apply to automobile accident cases, and could not be applied to cases under the New Jersey Law Against Discrimination. The court reasoned that damages under the Law Against Discrimination are intended to deter employers from discriminating, and reducing damages in these cases would not serve the purpose of the statute.