Under federal law, a discrimination plaintiff’s emotional distress and punitive damages are capped at $50,000 to $300,000 depending on the employer’s size, under 42 U.S.C. section 1981a(b)(3). California’s Fair Employment and Housing Act has no comparable cap. In 1982 the Supreme Court of California held FEHA plaintiffs may recover “all relief generally available in noncontractual actions, including punitive damages.” That gap explains why most California discrimination cases are pleaded under FEHA and why federal benchmarks understate a California employer’s exposure.
What do the federal caps limit?
Compensatory and punitive damages in intentional discrimination cases under Title VII and the ADA. Section 1981a(b)(3) caps “the sum of the amount of compensatory damages awarded under this section for future pecuniary losses, emotional pain, suffering, inconvenience, mental anguish, loss of enjoyment of life, and other nonpecuniary losses, and the amount of punitive damages.”
The cap depends on headcount “in each of 20 or more calendar weeks in the current or preceding calendar year.” It’s $50,000 for employers with more than 14 and fewer than 101 employees, $100,000 for more than 100 and fewer than 201, $200,000 for more than 200 and fewer than 501, and $300,000 above 500.
Backpay sits outside the cap. Section 1981a(b)(2) says compensatory damages “shall not include backpay, interest on backpay, or any other type of relief” authorized by Title VII’s own remedies provision. Lost wages, front pay, and attorney fees can add a lot to a federal award.
The jury also isn’t told. Under subsection (c)(2), “the court shall not inform the jury of the limitations.” A jury can return a large number, and the court reduces it afterward.
Why doesn’t FEHA have a cap?
Because the Legislature never wrote one, and the Supreme Court of California declined to imply one. In Commodore Home Systems, Inc. v. Superior Court (1982) 32 Cal.3d 211, the court held: “Absent a convincing statement of contrary legislative intent, we rule that, in a civil action under the FEHA, all relief generally available in noncontractual actions, including punitive damages, may be obtained.”
So a FEHA plaintiff can seek uncapped emotional distress damages, economic losses, and punitive damages under California’s general punitive damages statute. California’s punitive damages rules still apply, including the clear-and-convincing evidence standard and the requirement that a corporate employer’s officer, director, or managing agent was involved in or ratified the conduct. The firm covers that requirement in a post on punitive damages and managing agents.
Does FEHA reach more employers than Title VII?
Yes. Title VII’s caps start at employers with more than 14 employees, which tracks the federal coverage threshold. FEHA’s discrimination provisions reach smaller businesses. Government Code section 12926(d) defines “Employer” to include “any person regularly employing five or more persons,” and FEHA’s harassment ban reaches employers of one or more.
For a 10-person company, that means federal law may not apply at all, while FEHA exposes the business to uncapped damages. Small employers often learn this only when a demand letter arrives.
Why does this matter in litigation?
It shapes where and how plaintiffs sue. A California plaintiff with a discrimination claim almost always pleads FEHA, sometimes alongside federal claims. If the employer removes the case to federal court on diversity grounds, the FEHA claims keep their state-law remedies. The federal caps apply to federal claims, not to the state claims tried with them.
FEHA also has its own fee rule that favors plaintiffs. Under Government Code section 12965(c)(6), a prevailing defendant “shall not be awarded fees and costs unless the court finds the action was frivolous, unreasonable, or groundless when brought, or the plaintiff continued to litigate after it clearly became so.” So winning doesn’t usually mean recovering defense costs.
The practical point for multistate employers is reserves and settlement value. A case worth a capped amount under federal law may be worth far more in a California courtroom. Valuing California claims on federal assumptions is one of the most common mistakes in early case assessment.
Federal and California discrimination damages compared
| Issue | Title VII and ADA | FEHA |
|---|---|---|
| Emotional distress and punitive cap | $50,000 to $300,000 by size | No statutory cap |
| Backpay | Outside the cap | Recoverable |
| Employer coverage | More than 14 employees for the caps | Five or more, and one or more for harassment |
| Jury told about cap | No | Not applicable |
| Defense fee recovery | Limited | Only for frivolous, unreasonable, or groundless claims |
Valuing a California discrimination claim
- Preserve the personnel file, the decision-makers’ emails and texts, payroll records, and the policies in effect when the decision was made.
- Calendar the response deadline on the CRD complaint or summons, check for an arbitration agreement, and give notice to the EPLI carrier if the policy requires it.
- Identify the decision-makers and whether any of them could be considered a managing agent, and make sure no one takes further action against the employee that could look like retaliation.
- Pull the plaintiff’s compensation history and the documents behind the stated reason for the decision, so economic damages can be estimated early.
- Have counsel value the case under California’s remedies, not federal ones, before setting reserves or responding to a demand.
The firm’s page on discrimination defense for California employers explains how it handles discrimination claims for employers.
Damages questions from California employers
Does removing the case to federal court bring the caps into play?
Not for the FEHA claims. A federal court hearing a FEHA claim on diversity applies California’s substantive remedies. The section 1981a caps apply only to damages awarded under that section. Removal can change procedure and the jury pool, but it doesn’t cap a state-law award.
Are FEHA punitive damages unlimited?
There’s no statutory cap, but constitutional due process limits apply to any punitive award, and California requires clear and convincing proof of malice, oppression, or fraud. For a corporate employer, the conduct must trace to an officer, director, or managing agent. Those are real limits that defense counsel test before trial.
Do the caps apply per claim or per plaintiff?
Section 1981a(b)(3) applies the cap “for each complaining party.” In a multi-plaintiff federal case, each plaintiff has a separate cap.
Should a small employer worry about FEHA if it has under 15 employees?
Yes. With five or more employees, FEHA’s discrimination rules apply, and harassment rules apply even with fewer. Federal coverage thresholds don’t protect a California small business.
If your company is facing a FEHA discrimination claim
If your company has received a CRD complaint, demand letter, or lawsuit alleging discrimination under FEHA, early valuation under California’s remedies usually shapes the strategy. Rosenberger + Kawabata represents employers defending employment lawsuits and claims through its business litigation practice, including claims involving discrimination and punitive damages. Contact Rosenberger + Kawabata online for a confidential consultation, or call (310) 894-6921.
Sources
The statutes are 42 U.S.C. section 1981a and Government Code sections 12926 and 12965. The opinion is Commodore Home Systems, Inc. v. Superior Court (1982) 32 Cal.3d 211.
This post is general information about California and federal employment law as of November 7, 2026. It is not legal advice, and reading it does not create an attorney-client relationship. Employment statutes, regulations, and court decisions change often, and the outcome of any claim depends on its facts. Past results do not guarantee future outcomes.