Daily, managers are asked to make decisions and take action on employment-related situations. Sometimes, the decisions made or actions taken are done so in haste or without complete information, resulting in possible liability not only for the company, but for the manager or supervisor individually, too.
A number of laws have been interpreted to hold supervisors/managers and decision makers personally liable. Those laws include:
- Fair Labor Standards Act (FLSA)
- Family & Medical Leave Act (FMLA)
- Occupational Safety & Health Act (OSHA)
- Section 1981 Civil Rights Act
- Consolidated Omnibus Budget Reconciliation Act (COBRA), Employee Retirement Income Security Act (ERISA) & Health Insurance Portability & Accountability Act (HIPAA)
- Immigration Reform & Control Act
Let’s look at each of these areas separately.
Fair Labor Standards Act – This law regulates the payment of minimum wage and overtime as well as the non-discrimination provisions of the Equal Pay Act. The FLSA defines an employer as “any person acting directly or indirectly in the interest of an employer in relation to an employee.” If an individual has been given the authority by the employer to exercise control over the employee’s job, he or she can be found personally liable for decisions or actions in which they were responsible to some degree for the alleged violation. The most common pitfalls that could result in liability include work required trainings that are held “off the clock”; inappropriately classifying an employee as exempt from the FLSA; improperly docking an employee’s pay (for damaged or lost equipment, for example) so that his or her hourly pay rate is brought below minimum wage; and asking an employee to take “comp time” in lieu of receiving pay for overtime. Additionally, if there are pay inequities between men and women who work under the supervisor’s authority, the supervisor could have individual liability. It’s important that supervisors and managers understand that they can’t ask someone to clock out and then come back and complete a project “off the clock”. Similarly, the supervisor/manager must be very careful when determining an employee’s exempt status. “Comp time” frequently trips companies up. The practice of allowing employees to take time off at some future date in lieu of receiving overtime payment is not available to private-sector employers. Only government entities are permitted to use “comp time”.
Family & Medical Leave Act – The FMLA defines “employer” to include “any person who acts, directly or indirectly in the interest of the employer to any employees of such employer.” The FMLA applies to private-sector employers with 50 or more employees and to all public-sector employers regardless of number of employees . The FMLA provides up to 12 weeks of job-protected unpaid leave for such reasons as a serious health condition of the employee or his child, spouse or parent; to care for a new child (birth, adoption or foster); to care for an injured military servicemember; or for military service related to a child, spouse or parent’s qualified exigency leave. Courts have interpreted this language to include circumstances where supervisors exercised sufficient control over the terms and conditions of employment, including the authority to fire an employee or determine that the employee was not entitled to leave. The courts have also found managers/supervisors individually liable for violations of FMLA when they have been involved in the decision to terminate the employee. To minimize liability, obtain as much information as possible about the employee’s reason for his/her absences and document that information thoroughly. When in doubt, offer a leave form to the employee and ask that they have their health care provider complete it. Develop a consistent process for handling absences and leave requests. Request a medical certification if an employee is out because of an illness or injury. Recognize that you may have likely been put on notice regarding FMLA leave, so it is your obligation to follow up. Frequently, an HR Manager or other person has been designated to administer FMLA leave requests and it is prudent for the manager to speak with and understand his or her responsibilities in administering the company’s FMLA leave policy.
Occupational Safety & Health Act – Supervisors/Managers with the authority to hire, fire, enforce discipline or enter into contractual relationships are considered “agents” of the employer. This authority may create legal liability against the employer for their actions. That legal liability includes a supervisor’s negligent or intentional acts which may constitute violations of OSHA. A supervisor who permits an employee to work without using required Personal Protective Equipment (PPE) or who instructs an employee to perform work in an unsafe manner (such as working on a scaffolding without wearing a safety harness) can be held individually liable under the OSH Act for such violations…especially if someone is harmed as a result. If the violation is egregious enough, criminal charges could be brought against individual managers/supervisors.
Section 1981 – While Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act and the Americans with Disabilities Act do not extend the definition of employer to individual supervisors and managers, Section 1981 of the Civil Rights Act of 1866 does. Under Section 1981, supervisors who have the capacity to hire and fire or to recommend such decisions may be sued individually for race discrimination or retaliation.
COBRA/ERISA/HIPAA – These laws cover benefits and privacy of personal health information. Both COBRA and ERISA impose individual liability on those who act as plan administrators. Under ERISA specifically, there is individual fiduciary responsibilities under health care plans, retirement or 401(k) plans and other covered plans. HIPAA prohibits disclosure of personally identifying health information.
Immigration Reform and Control Act – Individuals who knowingly hire illegal immigrants can be held individually liable. That liability could include jail time.
Additionally, supervisors/managers can be held individually accountable for tortious violations such as:
- Intentional infliction of emotional distress
- False imprisonment
- Wrongful discharge
- Managers/supervisors should familiarize themselves with various employment laws. This includes discussing the reality of individual liability with other managers/supervisors in the organization.
- Communicate clearly to employees. When administering discipline/termination, do so in a private area and give specific, truthful reasons for the discipline/termination. Keep the discussion focused on the employee’s problem behaviors and not the employee’s attitude or personality traits. Discuss the steps taken in making decisions and show compassion about the impact any adverse actions will have on the employee.
- Review policies and practices to ensure they are in compliance with the law and best practices.
- Document, document, document. Whenever you are making decisions regarding an employee’s working conditions, document the facts, your processes and policies and reasoning that went into making your decision.
- Know when to get help. The best managers/supervisors know when to obtain additional information and guidance from another professional before making a decision they may come to regret. That person may be an HR Manager, a Controller, an attorney, or some other professional that can be relied upon to provide sound guidance.
While it is possible for managers to be held personally liable for the employment-related decisions they make, awareness, preparedness and education can minimize individual exposure.
Contributed by Christine Crews, SPHR, is Vice President of Human Resource Services for the Employers Association Forum, Inc. (EAF). EAF is a non-profit corporate membership-based association dedicated to serving the business and HR communities with world-class HR tools, hotlines & legal compliance, news & trends, surveys & economic data, benefits & insurance, risk management, training & consulting, and leadership & organizational development. HCCMO members receive discounted rates on all EAF classroom training at EAF’s training center in Longwood. Click here for currently scheduled programs: http://www.eafinc.org/online_store/training/HCCMO/training_programs.pdf.
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