Yep, unfortunately, you read that right. Individual managers, officers, HR pros and the like can be held personally liable for certain employment law violations. How can that be? The company is the employer, not the manager. Don’t most of the relevant laws say so? Some of them do. Generally speaking, there is no individual liability under Title VII of the Civil Rights Act, the Americans with Disabilities Act (ADA) and its amendments (ADAAA) the Age Discrimination in Employment Act (ADEA). Other laws do allow for individual liability, either directly (i.e. the statute says so) or indirectly (courts interpret them as saying so). I haven’t even mentioned state laws that may also come into play (yet). Let’s get back to the federal laws, though. How and when can an individual manager/officer/HR pro be held liable for employment law violations?
Let’s start with the Fair Labor Standards Act (FLSA). The FLSA defines “employer” as follows: “any person acting directly or indirectly in the interest of an employer in relation to an employee.” Courts have interpreted this definition rather expansively to include any employee or agent with supervisory power over employees, and looks to the “economic realities” of the situation to determine who has such status with respect to the employee. Here, I’ll use a real, live case example (at least it was live as of August, 2018):
The case is Foday v. Air Check Inc., N.D. Ill., No. 15-cv-10205 (Aug. 20, 2018). The employees were either lavatory service or ramp workers, performing various clean up tasks. They alleged that they were docked pay even when they were only 1 minute late for a shift (known as “rounding up” pay), that they were often made to work through lunch breaks or had their lunch breaks reduced, while Air Check automatically deducted 30 minutes for lunch, and were often required to work off the clock. They sued Air Check, the CEO, the President and the President of an affiliate company. The court dismissed the claims against the affiliate’s President and Air Check’s CEO, but allowed the claim against Air Check’s President to go forward.
Here was the court’s reasoning: The affiliate’s president wasn’t a party to the lawsuit, and the court saw no evidence that s/he had any connection to Air Check as an owner or executive, let alone any involvement in the pay practices. The court saw no evidence that the CEO had any involvement in Air Check’s day-to-day functions or management (e.g. s/he couldn’t hire or fire, supervise work conditions, schedules or determine rate and payment method for wages). As for Air Check’s President, however, the court found that he:
- Wrote the handbook with its requirement that workers arrive early to gather equipment and perform additional cleaning work at the end of a scheduled shift.
- Did have authority to hire and fire employees.
- Was on the ground at the airport nearly every day.
- Knew that Air Check’s lavatory and ramp workers had their time subject to the rounding practices.
If Air Check and the President thought their practices were saving them money, the joke is clearly on them.
Let’s move to another familiar federal law, the FMLA. As with the FLSA, the FMLA defines an employer as “…any person who acts, directly or indirectly, in the interest of an employer to any of the employees of such employer …” Courts have been reasoning that the FMLA’s definition closely tracks that of the FLSA, and therefore the standards used in evaluating who’s an “employer” under the FLSA apply to the FMLA.
Looking at the “economic realities” to determine the individual’s level of control over the employee(s) the US Court of Appeals for the Second Circuit found an HR Manager could be individually liable for FMLA interference/retaliation case in Graziadio v. Culinary Institute of America. The CIA’s payroll administrator, Cathleen Graziado, had requested FMLA leave to take care of her older son, who was experiencing complications from diabetes. A few weeks later she returned to work, with a certification supporting her need for leave. Shortly thereafter, her younger son sustained an injury for which he needed surgery, and so she again requested FMLA leave. Just before her intended return, she asked her supervisor if any additional supporting paperwork was needed. The supervisor forwarded her inquiry to the HR Director, who didn’t respond then or multiple times thereafter. CIA then sent her a letter saying that her paperwork didn’t justify her absences. She again asked what was needed and again did not receive a response, but was told she couldn’t return to work without paperwork justifying her absences.
Having been stonewalled, she retained counsel to follow up on her behalf. CIA took the position that it wasn’t obligated to explain what was missing from her paperwork, but rather it was her responsibility to comply with the statute. CIA then terminated her for job abandonment. The payroll administrator sued the CIA and the HR Director personally for FMLA interference and retaliation. The court reasoned that since the HR Director did have the ability to hire and fire, controlled when Ms. Graziado could return to work and played a part in her firing, that she could be personally liable in this matter.
Here’s one more federal law that allows for personal liability for violations: The Uniformed Services Employee Reinstatement Rights Act (USERRA). In Bello v. Vill. of Skokie, No. 14 C 1718, 2015 U.S. Dist. LEXIS 173354 (N.D. Ill. Dec. 31, 2015), a police officer also served as staff sergeant in the United States Marine Corps Reserve. He sued his employer, the Village of Skokie, Illinois, as well as several supervisors in their individual capacities, for violations of USERRA. The court very clearly rejected the Village’s argument that the police chief, deputy police chief, and the Village’s personnel director could not be personally liable under USERRA. How clear were they? Here’s what the court said: ”If the individual defendants are held liable for violating USERRA, the Court may enjoin them from implementing a discriminatory policy in the future, and it may require them to compensate Bello for the monetary damages he incurred.”
OK, that’s not quite all. Even when a federal law doesn’t allow for individual liability, there’s always those creative plaintiffs’ attorneys who find another way to sue. For example, Title VII may not include individual liability, but assault, or intentional infliction of emotional distress or similar claims do. Don’t forget that some state laws may allow employees to sue managers individually on an aiding and abetting theory, i.e. by doing nothing about, or taking inadequate steps to address the discrimination, they aided and abetted it.
I guess what I’m saying here is that individual managers and HR pros and officers who, acting on behalf of an employer, violate employees’ rights to be free from discrimination, to receive their pay, to take family and medical leave cannot — and should not– assume that the violations “only” come back to bite the company. These legal requirements –and any violations–can impact you personally if you are a manager, officer or HR practitioner. What can you do? Stay informed. Consult with your friendly employment counsel. Get training and take refresher classes–then put what you learn into practice, or you could quite literally learn the lessons the hard way. I don’t want to see that happen to you, so do something now, while you can.
OK, that’s all I’ve got for now…
Watch my first of two television interviews on Stop My Crisis with Vivian Gaspar.
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