Personal liability is when a civil action is brought against a person in an individual capacity. For employment concerns, an owner, supervisor or manager, or someone in a decision-making capacity, can be sued personally in addition to or in place of the company. This means their personal assets could be attached in order to satisfy a judgment. This can include their house, bank accounts, investments, etc.
Common personal liability suits may be brought against individuals based on defamation, emotional distress, battery, to name a few. These charges may be based on a number is issues including overtime, leaves of absence, benefits, and safety concerns.
There are several employment laws that can hold individuals personally liable. These laws include:
- Fair Labor Standards Act (FLSA)
- Family and Medical Leave Act (FMLA)
- Consolidated Omnibus Budget Reconciliation Act (COBRA)
- Employee Retirement Income Security Act (ERISA)
- Occupational Safety and Health Administration (OSHA)
Let’s see how these breaks down…
FLSA – an individual (supervisor or manager) who has authority over an employee may be partially responsible for an alleged violation. These violations occur when authority figures act against an employee by knowingly or continually do something in a manner that harms the employee. These violations can include failure to pay overtime, having employees work off the clock, or improper use of comp time (generally in the public sector). Other violations may include misclassification of pay status (exempt vs. non-exempt), failure to send employees to specific or required training, inconclusive job descriptions, input into wages, and even basic communication.
TIPS to Avoid Liability
- Ensure your job descriptions accurately reflect the position. Review them with the employee and give them a copy.
- Make sure employees are paid for all the time they spend working. This time includes hours worked at the company and for non-exempt employees, any time spent working after hours. Do not have employees working off the clock.
- Base your pay practices equally. You can consider seniority, education and responsibilities, but do not have different wage rates based on gender, age, ethnicity, or other protected class. You can also refer to the Fair Pay Act of 2017 which amends the FLSA to prohibit discrimination in the payment of wages on account of sex, race, or national origin. (Payment of different wages is allowed under seniority systems, merit systems, systems that measure earnings by quantity or quality of production, or differentials based on bona fide factors that the employer demonstrates are job-related or further legitimate business interests.) The bill allows compensatory or punitive damages for violations of such prohibition.
FMLA – Individuals may be liable for violations of FMLA where they were involved in the decision to grant or deny leave or if they were involved in any adverse decision affecting the employee’s rights upon returning from such leave.
TIPS to Avoid Liability
- Get as much information regarding the reason for an employee’s absence and document it.
- Follow required FMLA regulations. Provide proper notice in the proper timeframe and use the Medical Certification Forms.
- Ensure authority figures (supervisors & managers) are trained on the nuances of how FMLA works.
- Apply your process consistently and fairly to avoid the appearance of discrimination or retaliation.
COBRA, ERISA & HIPAA – COBRA and ERISA enforce individual liability on individuals who act as plan administrators. Failure to provide employee benefits or improperly managing benefits leaves a plan administrator open to personal liability. This can include failure to offer COBRA upon termination or failure to supply ERISA plan documentation. HIPAA violations generally revolve failure to keep an employee’s information confidential. If you use a third-party administrator and you are the liaison between them and your company, you may still be named in a suit for failure to ensure they are following proper protocol.
TIPS to Avoid Liability
- Become familiar with the COBRA, ERISA, and HIPAA and what your obligations are.
- Ensure notices and plan documents are sent out as outlined in the regulations.
- Audit your (and third-party) procedures to ensure compliance.
OSHA – Per the OSHA.gov website, an employer’s main requirement is to “Provide a workplace free from serious recognized hazards and comply with standards, rules and regulations issued under the OSH Act.” A complete list of obligations can be reviewed at https://www.osha.gov/as/opa/worker/employer-responsibility.html. Not reviewing safety protocols, not maintaining equipment, not providing proper training, and failure follow up on reports of safety issues are among the most common violations that can lead to personal liability for the individual who is in charge of ensuring the company meets safety standards.
TIPS to Avoid Liability
- Take time to walk around your facility and review the space, machinery & equipment, and employees at work.
- Have a safety program in place and review it periodically to make sure it stays up to date with what is happening in your company. This includes updating it as you get new machinery & equipment or change a process.
- Train your employees! Review and demonstrate your safety practices on a routine basis. This includes your general safety practices as well as any specific or mandatory OSHA required training. Make sure employees follow your practices and don’t be afraid to discipline employees who don’t.
- Hold safety meetings…with managerial staff and base employees. Discuss and examine any safety concerns.
- Follow up on any accidents.
EEO or Civil Rights Act of 1964 – Individual liability can also come into play for a civil rights violation. While normally not subject to individual liability, if a person in authority has the capacity to hire, fire or discipline, or has a say in the decision-making process, they may be sued individually if the matter in question pertains to discrimination or retaliation. Other instances can include:
- Defamation – speaking ill of an employee that can be interpreted as damaging their reputation.
- Tortious Interference with a Business Relationship – providing such a negative reference could be considered as trying to interfere with a former employee’s ability to gain other employment.
- False Imprisonment – this can be as simple as blocking an employee from leaving an office or space.
- Battery – any unwanted touching, such as a shove or grabbing an employee’s arm.
- Intentional Infliction of Emotional Distress – putting undue stress on an employee which makes them feel emotional…irritable…anxious…depressed, etc.
TIPS to Avoid Liability
- Remain calm. Don’t get into a name-calling event with employees.
- Create a policy on handling references and make sure supervisors and managers follow it.
- Never try to retain an employee during a meeting. If they wish to walk out, let them.
- Never touch an employee. Don’t shove them or put your arm around them to console them or hold them back.
- Avoid putting an employee in a stressful situation. Discussions should be held privately and in a quiet environment.
- Always have a witness in the space with you.
Remember – any employee may claim they were harmed by discrimination, retaliation, personal reasons, safety violations, etc. if they feel their supervisor or manager purposefully acted against them or knew about an erroneous situation but did nothing to correct it. Check with your HR Department if there are any questions or concerns about handling a situation and Document, Document, Document! If it isn’t written down – it never happened. Make sure you get as much information about a situation as possible. This includes what the alleged violation was, which law or regulation, location, date, time and person(s) involved.
TIPS to Avoid ANY Liability
- Know that you, as a person of authority, can be sued individually. The company is not the only entity that can be named in a suit.
- Stay up-to-date with employment laws and regulations.
- Always be respectful and courteous, and compassionate.
- Treat all employees fairly. This is key in avoiding a discrimination or retaliation suit.
- Use common sense management by conducting audits and updating policies.
- Focus on an employee’s performance rather than making it personal.
- Communication. Discuss the situation, but keep an open mind and accept input. Explain processes & procedures and always listen and answer questions.
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