Aurecchione v. Classic Coach, 96 N.Y.2d 23 (2001)

In employment discrimination cases under the New York Human Rights Law, while pre-determination interest on back pay awards is not mandatory, its denial is an abuse of discretion unless the Commissioner provides a justification for the denial, as pre-determination interest is an element of complete compensation to make the victim whole.

Summary

Carol Aurecchione won a human rights employment discrimination claim against her former employer. The State Division of Human Rights (Division) awarded her back pay but denied “pre-determination interest” (interest accruing from the date of discrimination). The New York Court of Appeals held that, under these facts, denying pre-determination interest was an abuse of discretion because the purpose of the Human Rights Law is to make victims whole, and pre-determination interest is part of that compensation. Although not mandatory, denying it without justification is an abuse of discretion.

Facts

Carol Aurecchione was hired by Classic Coach in April 1986 as a charter reservationist and was later promoted to office manager and then general manager. Despite increased responsibilities, her salary remained significantly lower than that of male office managers. In October 1987, Classic eliminated her manager position and offered her a lower-paying reservationist role, which she refused, requesting a termination letter.

Procedural History

Aurecchione filed a complaint with the Division of Human Rights in February 1988, alleging employment discrimination. Public hearings were held between 1995 and 1996. In 1999, an Administrative Law Judge issued a recommended decision, and the Commissioner rendered a decision, awarding Aurecchione back pay and compensatory damages but denying pre-determination interest. Aurecchione challenged the denial of pre-determination interest in a proceeding pursuant to Executive Law § 298. The Appellate Division confirmed the Commissioner’s determination. The Court of Appeals granted leave to appeal.

Issue(s)

1. Whether victims of employment discrimination are entitled to pre-determination interest on back pay awards under the New York Human Rights Law.
2. Whether the Commissioner of the State Division of Human Rights has discretion in awarding pre-determination interest.

Holding

1. While not automatically entitled, the denial of pre-determination interest in this case was an abuse of discretion; the award should have been granted because it complements the back pay award and contributes to making the victim whole.
2. Yes, the Commissioner has some discretion in determining appropriate compensation, subject to appellate review for abuse of that discretion; however, that discretion must be justified.

Court’s Reasoning

The Court of Appeals reasoned that the Human Rights Law intends to compensate victims of employment discrimination fully. Although the statute does not explicitly mention pre-determination interest, it should be liberally construed to effectuate its intent, which is to make victims whole. Citing Loeffler v Frank, the Court noted that federal courts have recognized pre-determination interest as an essential component of back pay awards under Title VII. The court emphasized that interest is not a penalty but a means of indemnifying the aggrieved party for the loss of the use of money during the period of discrimination. Quoting Love v. State of New York, the court stated that interest represents “the cost of having the use of another person’s money for a specified period.” Since Classic Coach had the use of the money wrongfully withheld from Aurecchione, denying pre-determination interest would provide them with an “interest-free loan.” The Court clarified that pre-determination interest is not automatically required but the Commissioner must justify its denial. Because no such justification was offered in this case, the denial was an abuse of discretion. The Court ordered the Division to calculate the interest and complete the process within 30 days.