“hold[ing] that the settlement proceeds paid to compensate Rivera for his lost wages are subject to income tax withholding”
How later courts described this case
- “hold[ing] that the settlement proceeds paid to compensate Rivera for his lost wages are subject to income tax withholding”
Written by the judges who cited it.
The opinion
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA
WYLETTA LEOPOLD CIVIL ACTION NO.
VERSUS 22-110-JWD-SDJ
EAST BATON ROUGE
PARISH SCHOOL BOARD
NOTICE
Please take notice that the attached Magistrate Judge’s Report has been filed with the Clerk
of the U.S. District Court.
In accordance with 28 U.S.C. § 636(b)(1), you have 14 days after being served with the
attached report to file written objections to the proposed findings of fact, conclusions of law, and
recommendations set forth therein. Failure to file written objections to the proposed findings,
conclusions, and recommendations within 14 days after being served will bar you, except upon
grounds of plain error, from attacking on appeal the unobjected-to proposed factual findings and
legal conclusions accepted by the District Court.
ABSOLUTELY NO EXTENSION OF TIME SHALL BE GRANTED TO FILE
WRITTEN OBJECTIONS TO THE MAGISTRATE JUDGE’S REPORT.
Signed in Baton Rouge, Louisiana, on May 15, 2025.
S
SCOTT D. JOHNSON
UNITED STATES MAGISTRATE JUDGE
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA
WYLETTA LEOPOLD CIVIL ACTION NO.
VERSUS 22-110-JWD-SDJ
EAST BATON ROUGE
PARISH SCHOOL BOARD
MAGISTRATE JUDGE’S REPORT AND RECOMMENDATION
Before the Court is a Motion to Reimburse (R. Doc. 46) filed by pro se Plaintiff Wyletta
Leopold on January 17, 2025. Defendant East Baton Rouge Parish School Board opposes
Plaintiff’s Motion (R. Doc. 49). For the reasons set forth below, it is recommended that Plaintiff’s
Motion be denied.
I. BACKGROUND
Plaintiff instituted this action on February 14, 2022.1 In her Complaint, Plaintiff, who was
employed by Defendant at the time, brings claims for violations of Title VII of the Civil Rights
Act of 1964, alleging racial discrimination and retaliation.2 On October 22, 2024, a settlement
conference was held before the undersigned, during which the Parties reached a settlement
agreement.3 Plaintiff agreed to resign from her employment with Defendant, and Defendant
agreed to pay Plaintiff $15,000.4 According to Defendant, a formal settlement agreement was
executed by Plaintiff on December 9, 2024.5 Shortly thereafter, on January 15, 2025, a settlement
check was hand-delivered to Plaintiff.6 The settlement check was in the amount of $10,517.64,
1 R. Doc. 1.
2 Id. at 1.
3 R. Doc. 38.
4 R. Doc. 49 at 2.
5 Id. at 3.
6 R. Doc. 48 at 1.
accompanied by correspondence explaining that a percentage of the $15,000 was withheld to pay
certain federal and state taxes.7 Plaintiff, in response, filed the instant Motion,8 to which Defendant
has filed an Opposition.9
II. LAW & ANALYSIS
In her Motion, Plaintiff argues that because the agreed amount was a settlement, it is not
subject to being taxed.10 As such, Plaintiff seeks reimbursement of the funds withheld to pay
taxes.11 In addition, Plaintiff argues that she also is entitled to receipt of a $2,000 stipend paid to
School Board employees in December 2024, as well as $5,000 “for mental anguish and emotional
distress” associated with Defendant’s alleged failure to pay the full settlement amount.12 The
Court addresses each, in turn, below.
A. Whether Tax Withholdings were Proper
It is not disputed that Plaintiff’s claims are for violations of Title VII. Title VII does not
allow for awards of compensatory or punitive damages; rather, recovery is limited to back wages
and equitable relief. United States v. Burke, 504 U.S. 229, 238 (1992) (citing 42 U.S.C. § 2000e-
5(g)). As explained by the Supreme Court:
… Title VII focuses on legal injuries of an economic character, consisting
specifically of the unlawful deprivation of full wages earned or due for services
performed, or the unlawful deprivation of the opportunity to earn wages through
wrongful termination. The remedy, correspondingly, consists of restoring victims,
through backpay awards and injunctive relief, to the wage and employment
positions they would have occupied absent the unlawful discrimination. Nothing
in this remedial scheme purports to recompense a Title VII plaintiff for any of the
other traditional harms associated with personal injury, such as pain and suffering,
emotional distress, harm to reputation, or other consequential damages.
7 R. Doc. 46 at 1; R. Doc. 49 at 3.
8 R. Doc. 46.
9 R. Doc. 49.
10 R. Doc. 46 at 1.
11 Id. at 2.
12 Id. at 1-2.
Burke, 504 U.S. at 239 (quotations and citations omitted).13 As no injunctive relief was sought,
Plaintiff’s recovery is for back wages.
26 U.S.C.A. § 61(a), which is part of the Internal Revenue Code, defines “gross income”
as “all income from whatever source derived,” with certain specified exclusions. An amount of
damages “received (whether by suit or agreement and whether as lump sums or as periodic
payments) on account of personal physical injuries or physical sickness,” however, is not included
in gross income. 26 U.S.C.A. §104(a)(2). But the Supreme Court specifically held “that the
backpay awards received … in settlement of … Title VII claims are not excludable from gross
income as ‘damages received … on account of personal injuries’ under § 104(a)(2).” Burke, 504
U.S. at 242. Because Plaintiff’s recovery is for back wages, that amount is not excluded from
gross income and, therefore, is subject to income tax withholding. See Rivera v. Baker West, Inc.,
430 F.3d 1253, 1258 (9th Cir. 2005) (“hold[ing] that the settlement proceeds paid to compensate
Rivera for his lost wages are subject to income tax withholding”). As such, Defendant’s tax
withholding was proper.
B. Whether Plaintiff is Entitled to Additional Recovery
In addition to the amount withheld for taxes, Plaintiff also seeks a $2,000 stipend she claims
“was paid to employees in December,” as well as $5,000 “for mental anguish and emotional
distress” incurred as a result of Defendant’s withholding of funds.14 These supplemental requests
by Plaintiff must be denied. This case has been closed, and no new claims may be brought.
On December 9, 2024, the Parties filed a Joint Motion to Dismiss, signed by both Parties,
in which they represented “that all claims in the above entitled and numbered cause have been
13 The Court notes that Plaintiff also seeks recovery for “all medical expenses” and “damages for emotional distress”
in her Complaint, but the only violation alleged is of Title VII.
14 R. Doc. 46 at 1-2.
fully compromised and settled, and should be dismissed with prejudice.”15 Based on Plaintiff’s
own admission, this case has been entirely resolved, and no new claims, such as additional claims
for damages, can be made therein. As such, Plaintiff cannot seek additional recovery in this
litigation.
III. RECOMMENDATION
For the reasons set forth above,
IT IS RECOMMENDED that Plaintiff’s Motion to Reimburse (R. Doc. 46) be DENIED.
Signed in Baton Rouge, Louisiana, on May 15, 2025.
S
SCOTT D. JOHNSON
UNITED STATES MAGISTRATE JUDGE
15 R. Doc. 41 at 1.