What's Sex Got to do With It? Gender and Damages for Diminished Earning Capacity
Imagine two individuals catastrophically injured due to the negligence of others. The injuries will be totally disabling over the course of their lifetime. The individuals are identical in every way except for their gender. Statistics tell us that the man’s lifetime earnings absent injury would likely exceed those of the woman. In these circumstances is it fair to award the woman less damages in a personal injury lawsuit for diminished earning capacity (future wage loss)?
The BC Court of Appeal addressed this issue in reasons for judgement released this week (Steinebach v. O’Brien). In short the BC Court of Appeal held that while it is improper to reduce a female’s diminished earning capacity award based on “simply discriminatory” components, statistics as to the difference of lifetime earnings cannot wholly be ignored. However, the Court went further and stated that it would be proper to offset this difference in part by adding an economic value to females statistically greater participation in child-rearing and housekeeping activities and addressing this in damages for pecuniary loss. Mr. Justice Groberbam provided the following useful reasons for judgement:
[60] There are, in fact, a number of different components that account for the difference between women’s average earnings and those of men. Some are simply discriminatory – they reflect historical patterns of undervaluing the work that women do, and paying them less than men for similar work. The defendants appear to concede that such factors should not be used to reduce damage awards for infant female plaintiffs.
[61] It seems to me that such a concession is appropriate. It is no longer seen as acceptable that women should earn less than men simply by virtue of their sex. It would appear that such blatant discrimination is vanishing; in any event, the courts should not countenance such discrimination by incorporating it into damages awards.
[62] Others components of the difference between men’s and women’s average earnings may, indeed, reflect lifestyle choices. Of particular importance are patterns of earning related to childbearing and child-rearing. Women, to a much greater extent than men, leave the workforce or engage in part-time work so that they are able to bear and raise children.
[63] In MacCabe v. Westlock Roman Catholic Separate School District No. 110, 2001 ABCA 257, 96 Alta. L.R. (3d) 217, it was held that it was an error in principle for the trial judge not to have taken into account negative contingencies associated with childbirth and child-rearing in assessing future income loss for a female plaintiff who had indicated, before she suffered her injury, that she wished to have several children and would consider staying home with them…
[65] To some extent, I agree with the reasoning of the Alberta Court of Appeal. The fundamental purpose of tort damages is compensation of victims. It would be highly artificial to impose on that system of compensation a regime designed to deal with inequalities that are inherent in the lifestyle choices that people actually make.
[66] The difficulty I have with the approach in MacCabe, however, is that it treats child-rearing as an activity having no economic value. I do not believe that this reflects the reality for most parents who choose to withdraw from the paid workforce to raise children, or choose to take part-time work in preference to full-time work. Nor am I of the view that the law requires child-rearing to be treated as a non-economic activity.
[67] The value of child-rearing has long been recognized in the domain of family law. Spouses are treated as economic partners. Where one takes over child-rearing responsibilities that would otherwise have to be paid for or shared by a spouse, he or she is still seen as contributing to the family’s economic well-being, and this may have an effect on family asset division in the case of marital breakdown.
[68] This is not a mere quirk of family law, but the reality of most family units where one spouse withdraws from the workforce (or reduces his or her working hours) in order to raise children. Such a decision is rarely taken lightly, and is typically accompanied by a re-allocation of family resources rather than being a hardship suffered by the non-income-earning spouse alone.
[69] The burden of economic costs being a shared one, it can be misleading to represent it as simply being borne by the spouse who does not earn an income. Yet, for the purposes of earnings tables, this is exactly how the burden is reflected. For certain purposes, it would be more accurate to account for the shared burden by notionally transferring earnings from the income-earning partner to the partner who decreases his or her income in order to devote time and effort to child-rearing.
[70] Women are much more likely than men to leave the workforce temporarily or reduce their paid work in order to take on homemaking or child-rearing roles. The result is that earnings tables reflect the economic costs associated with such decisions as falling disproportionately on women. Earnings for men are thereby overstated, while those for women are understated.
[71] Even if it were to reject the idea of treating the costs associated with such decisions as shared ones, the Court would still have to adjust earnings table amounts to reflect the economic value of child-rearing. At one time, it may have been debatable whether a spouse who took on child-rearing or housekeeping responsibilities could claim compensation if, as a result of a tort, s/he became unable to continue to perform them (see Regina Graycar, “Hoovering as a Hobby and other Stories: Gendered Assessments of Personal Injury Damages” (1997) 31 U.B.C. L. Rev. 17). It is now established, however, that a person who undertakes housekeeping activities and is disabled from doing so can make a claim to pecuniary damages: Kroeker v. Jansen (1995), 123 D.L.R. (4th) 652, 4 B.C.L.R. (3d) 178 (B.C. C.A.).
[72] It seems to me that, in line with Kroeker, the courts must not presume that the absence of monetary recompense for an activity necessarily means that pecuniary damages will be unavailable to a plaintiff who is disabled from engaging in it. Because earnings tables fail to account for the value of such unpaid activities as child-rearing and housekeeping, they will tend to represent under-estimates of a plaintiff’s loss of future earnings.