HR Personal Liability Update - Do you know how to protect yourself?
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.
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.
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.
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.
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.
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.
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.
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.
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.**Stay on top of employment law compliance and personnel management the easy way -- through HR Matters E-Tips. Use the tips as a handy resource to answer your daily HR questions or as a training tool for your supervisors and managers. Each weekly issue includes practical insights into common HR issues. Click for more.
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posted by e-Learning Place at 1:12 PM
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