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Why Employees Sue You Personally
Quick Review: No Liability under Federal Discrimination Laws
Public Employers Beware: You May Still Be Liable
Liability under Other Federal and State Employment Laws
Risk of Suit May Be Worse Than Actual Liability
Six Tips to Minimize Your Liability
Build Your Defenses before They Are Needed
The threat of personal liability has
heated up over the years as several federal and state courts have
reinforced that HR decisionmakers can be personally responsible for
their employment actions. Protect yourself from exposure to
lawsuits by following the six steps below.
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[Creating HR Policies or Employee Handbook?]
Trends in court decisions
underscore a disturbing fact: HR practitioners, supervisors,
business owners, and other decisionmakers are being held personally
liable for their actions under several employment laws. In other
words, the normal corporate wall limiting personal liability does
not totally protect you. Several state and federal courts have
issued new decisions finding HR professionals, and other managers,
personally responsible for their employment actions. This liability
has been both expensive and time consuming. Some of the cases
involved six-figure judgments, and almost all of them have taken
years to wind their way through the court system. This exposure is
hard to ignore, and HR professionals are rightly concerned about the
trend. But there is some good news to report, too. You can make
yourself a less attractive target for legal action by following the
six steps suggested below.
Why Employees Sue You
Personally
The reasons
employees may target you personally have not changed. First,
plaintiffs’ attorneys representing disgruntled employees pursue HR
decisionmakers as a way to pressure the employer to settle a case.
Second, the individual becomes another source of income for
damages. Third, the employee may want to penalize the manager who
carried out the adverse employment action, even if the manager did
not have much input in the actual decision. Finally, in a few
cases, the manager’s actions may have been so outrageous or
offensive that the employee seeks revenge by suing the manager
personally.
A Quick Review: No Liability under Federal Discrimination Laws
Fortunately, you are not liable under every employment law. HR
decision-makers generally have not been held liable for decisions
under federal discrimination laws, including Title VII of the Civil
Rights Act of 1964 (Title VII), the Americans with Disabilities Act
(ADA), and the Age Discrimination in Employment Act (ADEA). Every
Circuit Court of Appeals that has addressed this issue has ruled
that individual supervisors are not personally liable under those
statutes. Therefore, if you are named as a defendant in a
discrimination case involving claims in federal court of race, sex,
disability, age, or other type of discrimination, you probably will
not be found personally responsible for your actions.
Public Employers Beware: You May Still Be Liable
Managers
and supervisors of federal, state, or local government entities,
however, may be personally liable for claims under Section 1983 of
the Civil Rights Act of 1871. Section 1983 prohibits “persons”
acting under the “color of any statute, ordinance, regulation,
custom or usage” of any state from depriving any individual of “any
rights, privileges, or immunities” provided by the U.S. Constitution
or law. Discrimination claims involving public officials often
allege the officials violated this law. Typically, if a public
official (including an HR professional or manager) has the authority
to administer the public employer’s policies and make decisions
consistent with applicable laws, the official may be personally
liable for those decisions if they have a discriminatory effect on
an employee.
Two federal court
decisions underscore just how expensive this liability can be. In
Knussman v. Maryland, 65 F. Supp.2d 353 (D. Md. 1999), the court
upheld a jury’s finding that the state personnel officer was
personally liable for $375,000 in emotional damages caused by her
failure to grant leave to a male employee because of his gender.
Similarly, in Alexander v. Fulton County, 207 F.3d 1303, (11th Cir.
2000), the Eleventh Circuit upheld a jury’s finding that a sheriff
was personally liable for intentionally making racially based
employment decisions and assessed over $500,000 in punitive damages
against her and the county employer.
Liability under Other Federal and State Employment
Laws
Several other
federal and state employment laws do allow for personal liability
for violations. Federal laws that have been interpreted to hold HR
decision-makers personally responsible include the Fair Labor
Standards Act, the Equal Pay Act, the Family and Medical Leave Act,
the Consolidated Omnibus Budget Reconciliation Act, the Employee
Retirement Income Security Act, the Occupational Health and Safety
Act, and the Immigration Reform and Control Act. Therefore, every
time you make a decision involving wage and hour, leaves of absence,
equal pay, safety, I-9 forms, and benefit plan issues, you may be
personally at risk. Penalties under these laws range from
administrative fines all the way to imprisonment.
State
courts have been particularly active recently in finding personal
liability for violations of state discrimination laws. These courts
generally have interpreted their state employment discrimination
statutes more broadly than federal discrimination laws to find
supervisors and other HR decisionmakers personally liable for
discriminatory actions. In the last year, courts in Iowa,
Massachusetts, and Washington determined that individuals can be
personally responsible for their discriminatory employment
decisions. Many state courts also have found supervisors liable for
tort claims (wrongful acts) such as defamation, intentional
infliction of emotional distress, invasion of privacy, negligent
training, fraud, and misrepresentation. These claims often arise in
the context of employee discipline or termination.
Risk of Suit May Be Worse Than Actual Liability
As a practical
point, your risk of being sued is greater than your risk of being
found liable by a court or agency. If your name is on any
employment document or if an angry employee mentions that you were
involved in a decision, you may be named in a lawsuit. The worst
part of this risk often is the actual defense process itself. The
reality is that even if you ultimately are not found liable, you
could spend several years – and thousands of dollars – defending
yourself.
Six
Tips to Minimize Your Liability
What can
you do to limit your exposure? Here are six suggestions that can
both reduce exposure and help prevent liability:
1.
Know the law, know your risks. Make sure
you understand which laws carry personal liability and determine
whether you have responsibility for implementing these laws. For
example, if you make decisions that involve FLSA wage and hour
issues, FMLA leave, or COBRA, you should take extra care to make
sure you are complying with these laws.
2.
Keep your policies up-to-date and follow them.
Written policies tell your employees how they can expect to be
treated and give you guidelines for applying the policies
consistently. However, the policies must comply with legal
requirements and you must follow them, or they may be used against
you as evidence of violations of the law.
3.
Don’t make hasty decisions. If you are
not sure what the appropriate decision should be, don’t be pressured
into taking action. Instead, take time to investigate the
situation, check policies and procedures, and consider any
applicable laws or regulations before making your decision. In
addition, consult with an HR expert or legal counsel when
appropriate.
4.
Explain your decisions. Every time you
make a decision that has a negative impact on an employee, you
should explain your rationale for the decision. Most employees sue
when they feel they have been treated unfairly or illegally and
because they don’t understand the decisionmaking process.
5.
Document your decisions. Written records
help everyone’s memory and can be invaluable in demonstrating and
supporting the fairness of your decisionmaking process, both to the
affected employee and, if necessary, in court. The documentation
also should help show that you complied with any applicable laws.
6.
Check insurance policies to see if you are covered.
Some employers have Employment Practices Liability Insurance (EPLI)
that may cover you as well as the organization. However, since the
provisions of these policies vary widely, you should make sure you
are covered personally. In addition, your employer may have a legal
obligation to defend you if you are sued as a result of decisions
made in the performance of your normal job duties.
Build Your
Defenses before They Are Needed
Personal
liability for employment decisions is not a new concept. However,
it has become an increasing threat for managers and HR professionals
as employees and their lawyers learn to use the issue to their
advantage. As a result, even though the courts typically have
rejected claims against HR decision-makers in federal discrimination
cases, the number of these cases has increased substantially. To
this you can add a growing number of cases finding supervisors
personally responsible under state discrimination laws, Section
1983, and other federal employment statutes.
On the positive
side, actual legal liability is not a foregone conclusion and must
be proved. If you follow the six steps outlined above, you can make
yourself a less-inviting target. A carefully crafted strategy that
identifies your exposure and then works to reduce it is your best
defense.
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Personnel
Policy Service, Inc.
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