Managers, HR staff, and business owners are well aware that their organizations can be sued by employees, applicants, and ex-employees for a variety of reasons from discrimination, to overtime violations to safety issues. But if you are a manager can you be sued as an individual as well?
Yes, You Can Be Personally Liable in Some Situations
- Discrimination Law
The good news is that the majority of federal Circuit Courts of Appeal have found that there is no personal liability in discrimination cases brought under Title VII (e.g., race, sex, religion, etc.), The Age Discrimination in Employment Act, and the Americans with Disabilities Act. The statutes are similar and the definition of “employer” under each of them is not interpreted as intended to apply to individuals. The bad news is that many state courts have found individual liability under state discrimination laws. State law claims are typically included with federal claims. Also, public sector managers may be liable under Section 1983 of the Civil Rights Act of 1871.
- Fair Labor Standards Act
Managers can be individually liable under the FLSA as that statute defines an employer as “any person acting directly or indirectly in the interest of an employer in relation to an employee.” The Equal Pay Act, which is part of the FLSA, provides for similar liability. FLSA lawsuits (especially class actions) have spiked recently and are an increasing source of risk for employers generally.
- Family and Medical Leave Act
The FMLA is based on the FLSA. Consequently, in the majority of the courts that have examined the issue, personal liability of managers has been found. Possible liability under the FMLA might be particularly troubling, given the complexity of the FMLA and how commonly managers as well as HR people are involved in FMLA actions.
- COBRA, ERISA & HIPAA
Both COBRA and ERISA impose individual liability on those who act as plan administrators. Liability for actions under HIPAA may also exist.
- State Common Law Claims
State common law claims, based on case law not statute, can be another source of personal liability. They can include such things as wrongful termination, intention/infliction of emotional distress, defamation or invasion of privacy.
- Criminal Liability
Going through the trauma of being named in a lawsuit and facing possible financial penalties are bad enough, but could you really go to the slammer or face other criminal penalties? While certainly not a common occurrence it is possible that managers could be subject to criminal liability in certain circumstances. Some examples could include: charges of obstruction of justice (e.g., destroying documents or making false statements), OSHA violations, or immigration related charges.
I’m A Nice Person, Why Would They Sue Me?
Reason would seem to indicate that a disgruntled employee would really only be interested in suing an employer, not a manager. After all, the employer has the deep pockets filled with money. The manager likely has a mortgage, credit card debt, and not a lot of assets to go after.
That’s true. However there are a few reasons besides personal assets why a plaintiff might include a manager in a lawsuit. A disgruntled employee might simply be very angry, hate the manager or believe that he was treated very unfairly. Or it might be a case of “shooting the messenger” who did the firing. Some attorneys believe including the manager puts additional leverage on the company to settle or perhaps drives a wedge between the organization and supervisor. There does seem to be a trend to include the manager.
Remember also, that lawsuits don’t simply involve managers who’ve been directly accused of discrimination or harassment. They also include HR staff and others who haven’t come close to doing anything illegal but because of their positions are somehow involved or touched by the action.
Should I Be Losing Sleep Over This?
No, especially not if you implement sound HR practices. If you should be unlucky enough to be named in a lawsuit it is most likely in your company’s interest to defend you and to handle any damages. Or the company may be required to defend you. Juries have sympathy for individuals, plaintiffs, or defendants who have acted legally and professionally. There is not such a soft spot in their hearts for corporations.
What Can I Do So That I Never Have the “Opportunity” Of Participating in a Lawsuit?
- Good HR practices and prevention are the keys.
- Understand HR law basics. (Resolve to pay better attention during that next training session!)
- Know what’s in your employee handbook and policies and apply them consistently.
If you’re in charge of them, make sure they are updated regularly and implemented appropriately.
- Effectively utilize performance appraisals. They’re a great development tool and good evidence.
- Document. Document. Document. (It’s trite, redundant, and overstated. But it’s true.)
- Don’t make quick decisions. Step back. Make sure punishments fit crimes, ensure that you are consistent, and that you avoid even the appearance of discrimination.
- Maintain your employees’ dignity. Many lawsuits have nothing to do with discrimination. They are about perceived lack of respect or unfairness.
- Communicate with your employees and explain your actions. If your employees understand you and realize you may have justification (and evidence!) they will be less likely to challenge you later on.
- Get HR involved early. If you are HR, get your legal counsel involved early.