Jack A. Rivera v. Baker West, Inc., an Arizona Corporation Baker Concrete Construction, Inc., an Arizona Corporation, Dba Baker Concrete, Inc.

Jack Rivera (“Rivera”) appeals the district court’s order dismissing his suit against Baker Concrete Construction, Inc: (“Baker”). Rivera argues that Baker improperly withheld approximately fifteen thousand dollars in state and federal employment taxes from a cheek that was paid to settle his claim for unlawful workplace discrimination and wrongful termination and, therefore, that the district court erred in dismissing the suit on the basis of the settlement. Rivera’s argument is twofold: first, he argues that the settlement proceeds paid by Baker were intended to reimburse Rivera for personal physical injuries and should therefore be excluded from his gross income under 26 U.S.C. § 104 (a)(2); second, he argues that, even assuming the settlement proceeds represent lost wages, an award of back pay under Title VII is not subject to income tax withholding.

We conclude that the district court did not clearly err in finding that the settlement proceeds were not intended to compensate for personal physical injuries, but instead represented lost wages. Because the district court reasonably classified the settlement proceeds as back pay, the district court properly held that Rivera’s…