Use of Agency Funds To Make Cash Settlements of Discrimination Complaints

The Assistant Secretary (Administration) of the Department of the Treasury requested an opinion as to the legality of the use of agency funds to make cash settlements of discrimination complaints without regard to an employee's entitlement to backpay, and without any findings or admissions of discrimination or of an unwarranted or unjustified personnel action. The Back Pay Act would not constitute authorization for such cash payments. As to the application of title VII of the Civil Rights Act of 1964, title VII clearly provides authority for the payment of money damages in the form of a backpay award. However, the payments proposed do not appear to be based on the usual backpay formula involving fixed rates for definite periods. Instead, such damages must be viewed as punitive damages, or compensatory damages other than backpay. All of the circuits which have addressed the issue have concluded that title VII does not authorize awards of punitive damages or compensatory damages other than backpay. GAO is not aware of any general authority for Federal agencies to enter into compromise settlements, and there is no specific authority to do so in title VII.