Putting Gretchen Carlson’s Multi-Million-Dollar Settlement In Context

Gretchen Carlson CREDIT: AP Photo/Richard Drew
Gretchen Carlson CREDIT: AP Photo/Richard Drew

On Tuesday, Fox News announced a settlement with former host Gretchen Carlson over her lawsuit claiming Roger Ailes sexually harassed her, reportedly agreeing to pay her $20 million.

That figure may pop some eyes. Many people cling to the idea that women fabricate or exaggerate sexual harassment claims as a get-rich-quick scheme at the expense of their male coworkers. In reality, most plaintiffs wind up with far smaller settlements, if anything at all.

A Rare Payday

In fact, it’s unusual for a plaintiff to even break the six-figure mark, as Carlson did. Anyone who brings a lawsuit claiming sexual harassment under the protections of Title VII of the federal Civil Rights Act faces hard limits on how much she can get in compensation through damages.

In the early 1990s, Congress allowed plaintiffs to seek damages — before then, plaintiffs could only seek back pay for wages missed — but capped them at $300,000 for the largest employers and even less for smaller ones. Those caps also have not been updated since they took effect, so they’ve lost value to inflation over the past quarter-century.

That means even the tiny sliver of all victims who feel emboldened enough to come forward, make a formal complaint about the harassment they face, pay for a lawyer and who are actually successful in proving their cases rarely end up with millions. In fact, one study found that the median sexual harassment settlement is just $30,000.

“The kinds of numbers that you see out of successful litigation are rarely in the millions.”

Other cases of discrimination, such as racial harassment, aren’t subject to the same strict limits.

“It’s created this very strange system where certain civil rights plaintiffs are only eligible for second-class remedies,” noted Emily Martin, vice president for workplace justice at the National Women’s Law Center.

Victims can bring cases under state laws, some of which don’t cap damages or have higher ones. But even then, big paydays are rare.

“You find someone with a very compelling case and everything goes right, and they get $100,000,” said Joanna L. Grossman, a law professor at SMU Dedman School of Law. “The kinds of numbers that you see out of successful litigation are rarely in the millions.”

Martin agreed. Carlson’s payout is “a very large settlement,” she said. “It’s not as though that’s what most women receive even if they have very strong claims, even if they win their cases.”

It’s All Relative

Still, there are reasons to think that Carlson’s figure isn’t even that high.

“Twenty million certainly sounds like a lot of money to just about anybody,” noted Jennifer Reisch, legal director at Equal Rights Advocates. But that dollar figure has to be contextualized by a number of factors: what Carlson would have kept earning over the next several years had she not felt forced out of Fox, what her earning potential would have been in the future if this experience hadn’t disrupted her career course (and the public attacks on her from some former colleagues hadn’t potentially damaged her reputation), and compensation for any emotional distress she endured for being harassed and then retaliated against.

In light of those considerations, $20 million starts to look less fantastic. “This doesn’t represent in any way a windfall for her,” Reisch noted. “The fact is that $20 million may represent less than ten years, or less than five years, of earnings for Gretchen Carlson.”

“This doesn’t represent in any way a windfall for her.”

What is clear, however, is that even in egregious cases of workplace harassment, most victims don’t see a whole lot of money. Taken together, and compared both to Fox’s revenues of $2.3 billion and the $40 million golden parachute Roger Ailes supposedly received for leaving Fox in the wake of the harassment allegations, Carlson’s lawsuit ultimately doesn’t make a huge dent. “It feels like a drop in the bucket, and that’s what most settlements against large employers end up seeming like,” Reisch said.

Money Talks

That means harassment is a relatively low-cost risk for many employers. Companies are less likely to take proactive measures against harassment if they know that they won’t have to pay much even if they’re found liable for someone’s complaint. “It can definitely have an impact on how motivated employers are to address these issues on the front end,” Martin said.

Carlson’s case, and the outcome, has the potential to shift that, at least in her industry. “Money does talk in these situations,” Grossman noted.

For example, the law industry was deeply rattled in the mid-90s when legal secretary Rena Weeks sued the law firm Baker & McKenzie over being groped and enduring inappropriate remarks from a partner and netted a $7 million verdict from a jury that was later reduced to $3.5 million. It was one of the largest harassment settlements ever at the time.

“It just scared people,” Grossman noted, particularly law firms that had thought themselves immune to harassment claims. But after Baker & McKenzie was made to pay millions, firms scrambled to understand their liability and come up with solutions.

“Money does talk in these situations.”

The same reckoning may now take place in the broadcast television industry. “Yes, this is a creative industry, and yes this is a freewheeling environment, but there are still rules,” Grossman said. “It should have an effect on that industry to look at its norms.”

And people experiencing sexual harassment at work, in broadcast and beyond, could easily be emboldened to do something about it after seeing how things played out for Carlson. “Retaliation and futility: those are two things that deter complaints,” Grossman noted. But Fox took swift action on behalf of Carlson in a way that should have discouraged retaliation against women who came forward.

Not only was Ailes pushed out of Fox, but Carlson can now point to her settlement and the public apology that Fox offered as proof of her success. “The public support she received, the fact that her employer felt compelled to take some real action, is a helpful story, on balance, for women who are wrestling with this in their own workplace,” Martin said.

“I don’t see how these settlements would do anything other than encourage other victims to tell their stories,” Grossman added.