It’s bad enough dealing with lawsuits against your company—now individual managers are being named as defendants as well. Here’s what’s happening and how to fight it.
An increasing number of executives and managers are being sued personally for work-related decisions, right alongside their employers, says Tresa Baldas, writing at the website, inhousecounsel.com.
What’s fostering the upsurge in suits? Several factors are working together to generate this scary development, she says.
First, lawyers have been more successful at getting judges to accept the suits. Although federal discrimination laws do not allow individual suits, other federal laws, including the Family and Medical leave Act (FMLA), the Fair Labor Standards Act (FLSA), the Consolidated Omnibus Budget Reconciliation Act (COBRA), the Employee Retirement Income Security Act (ERISA), and the Occupational Safety and Health Act, do permit such suits.
Furthermore, many of the lawsuits naming individuals have been filed under state discrimination or wage and hour laws. Attorneys find that state courts are easier venues, largely because state employment laws are looser than the federal and often do allow individuals to be held personally liable, Baldas says.
Second, naming individual defendants (even if the odds are against the suits being won) brings more pressure to settle, which is generally what the suing parties want—money without having to invest much in getting it.
Third, it’s a “divide and conquer” strategy. Because individual defendants are worried about their own suits, they may not be so rock-solid loyal to the company cause. Especially if they feel that the company is not solidly behind them, they may turn on the company to save themselves.
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Fourth, it’s that old motive, revenge. Employees who believe their treatment was egregious, embarrassing, or harmful may want the person that treated them wrongly to personally suffer.
No Easy Lay-up
Nevertheless, says Baldas, winning against individuals is no “easy lay-up” for attorneys looking for a quick settlement. “Corporate America is armed and ready to fight back,” she explains. Baldas cites attorney Roy Ginsberg of Dorsey & Whitney’s Minneapolis office, who suggests that going after individuals is often not in the best interest of plaintiffs. The reasons?
First, Ginsberg says, everyone you name will have his or her own attorney. They’re all going to make broad discovery requests and they all will want depositions. And, they all will be sitting across from you in the courtroom.
Plus, executives individually named may not be primarily interested in a quick settlement. They tend to be more interested in vindicating their names and reputations. This will make them fight longer and harder.
What Types of Charges Might Stick?
Typically, managers and supervisors are protected if they are acting within the scope of their employment and not doing something clearly illegal. What actions most put individual managers at risk?
Retaliation against an employee for exercising a legally guaranteed right might be personally actionable, the experts say. A manager who refused to pay for all overtime or who encouraged employees to work through a mandated break might also be found liable.
Don’t Forget Torts
In addition to direct violations of employment law statutes, managers need to avoid “tortious” acts, says Wendy Bliss, speaking in the HR Manager’s Legal Reporter. Bliss is an attorney, speaker, and trainer based in Colorado Springs. Torts are “civil wrongs” that cause harm. Some behaviors that can lead to tort-based lawsuits are:
- Defamation or public humiliation
- Lying or misrepresentation
- Outrageous behavior (like pounding the table or screaming)
- Ignoring or isolating an employee
- Assault and battery
- False imprisonment
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Roles that Put You in Jeopardy
Remember that there are many roles that can set you up for individual liability, notes Bliss.
- Perpetrator—committing illegal or tortious acts
- Accessory—ignoring illegal behavior after an employee complains
- Decision-maker—making decisions on important personnel matters
- Messenger—delivering bad news to employees
- Recordkeeper—completing or maintaining legally mandated records
- Administrator—serving as a benefit plan administrator
What steps can you take to minimize suits? Look for that … and a tool to help … in tomorrow’s Advisor.