Punitive Damages Award Formula Idea

Companies worry about the size of the punitive damage awards given out in state and Federal courts in the United States. This is one reason why lawyers go shopping around where to file lawsuits so that if they win the believe the jury will award large punitive damages (and since they usually get 25 to 45% of what is awarded, they win also.)

 

The Federal government should pass a very simple law stating what the maximum amount would be for all punitive damages is based SOLEY on the company itself.

 

It is VERY simple and is directly related to the firm being sued.

 

Take the LOWEST paid employee (including contractors!! In USA or Out of USA) ANYONE who works for that company and find their hourly wage.

 

Then find the HIGHEST paid employee and find their hourly wage (usually this is the CEO / President, total compensation package -- not just their salary) and find the ratio between the two.

 

The resulting ratio is then used to multiply against the awarded damages to come up with the maximum punitive damages that can be awarded by the jury.

 

If someone is working at a company making $8.73 hour, and the CEO makes $8,662 an hour (a CEO whose total compensation package is $18 million a year the 8,662 is what they would make in an hour based on a 2087 hour work year - which is what defines a work year for an hourly Federal employee). This means a ratio of 922.

 

So if a jury awarded someone $500,000 in direct damages, then the punitive award cannot exceed  $461,000,000.

 

The CEO is in charge, he is responsible, and if the Board of Directors thinks he is worth that much over the lowest paid worker - then damages should be in the same proportion of his pay vs. the lowest paid person who works in any capacity for them.

 

Problem solved.