If you are a plaintiff in an employment discrimination case in Connecticut, you have probably heard the argument from the defense attorney and even the CHRO that unemployment benefits are applied as an offset to the lost pay back amount. Do not accept the argument. Under Connecticut law, it is up to the sound discretion of the trial court as to whether or not unemployment benefits will be used as an offsetting mechanism. There are strong arguments against the use of unemployment benefits as an offset.
One, payments of unemployment compensation are not directly made to the ex-employee by the ex-employer/defendant but by the state out of state funds derived from taxation. True, these taxes were paid by employers, and thus to some extent the defendant helped to create the fund. However, the payments to the employees were not made to discharge any liability or obligation of defendant, but to carry out a policy of social betterment for the benefit of the entire state. In other words, unemployment benefits are entirely collateral and collateral sources are not used as offsets unless expressly directed by federal or state statutory law.
Two, ex-employers who have violated the law by committing illegal discrimination should not be allowed to have their liability for damages subsidized by other employers who have complied with the law.
Three, if Congress wanted state employment agencies to be able to recoup unemployment benefits paid to individuals that received a back pay award in an employment discrimination cases, it would have inserted such language into the statutes.
Four, disallowing the offset does not encourage individuals who have been wrongfully terminated from looking for new employment. Ex-employees must make reasonable efforts to find new employment and the failure to do so results in the denial of back pay for the period of times where the ex-employee failed to look for work.