What are Compensatory Damages in a Class Action?
By Timo Bakker · July 6, 2026 · 5 min read
Compensatory damages are the main type of monetary recovery in most class action settlements. They aim to restore what the plaintiff lost. Here is how they work.
Types of compensatory damages
- Special (economic) damages. Actual out-of-pocket losses. Refund of purchase price, medical bills, lost wages, property damage.
- General (non-economic) damages. Pain and suffering, emotional distress, loss of enjoyment. More common in personal injury than pure consumer class actions.
Compensatory vs statutory damages
Compensatory damages aim to make you whole for actual harm. Statutory damages (per statute) are set amounts regardless of actual harm — e.g., TCPA robocall settlements pay $500-1,500 per violation regardless of whether the calls caused measurable harm.
Compensatory vs punitive damages
Compensatory damages restore losses. Punitive damages punish the defendant beyond compensating you. In class actions, punitive damages are rare (see our punitive damages guide).
How compensatory damages are calculated
In consumer product class actions: often equal to the purchase price (or a percentage). In data breach: statutory + documented losses tier. In wage and hour: unpaid wages + interest. The specific formula appears in the settlement agreement.
Tax treatment
Compensatory damages for physical injury are non-taxable. For lost wages: taxable as wages. For refund of purchase price: not taxable. See our tax guide.