In the litigious society we live in, most business people are all too aware of the big dollar employment practices liability risks companies face from sexual harassment claims, discrimination allegations, wage and hour violations, and the like.  But one area where many managers are woefully underprepared is in protecting themselves from personal liability.

Manager Liability in Employment Law

There are grounds to personally name you in an employment lawsuit if any of the following match your work requirements:

·         You have control over day-to-day business decisions.

·         You manage an employee who is (or may become) disgruntled.

·         You drive employment decisions such as hiring, firing, or wage increases.

·         Your name is on an employment document for your company.

·         You are approving or denying FMLA requests.

·         You could be viewed as another source of income for damages.

People at risk include all managers and HR professionals -- you don’t need to be an owner or president of a company to be named personally in a lawsuit.  [Haybarger v. Mancino is one recent case that demonstrates this.]

Why would it be advantageous to hold managers liable for employment practices?

In some cases where managers are personally named in an employment-related lawsuit, it’s a form of revenge where the employee is trying to get even with a manager that they feel treated them unfairly.  Sometimes the causes are economic; with people being laid off, losing their jobs, and struggling financially, they may look for alternate sources of compensation. 

There is also a growing trend for plaintiffs’ lawyers to encourage their clients to name managers in the suit to open up more opportunity for discovery.  By arguing manager liability, the plaintiff’s bar can require more people to give depositions and with this, there is greater opportunity to dig out potentially useful information.

Some lawyers support extending liability to individuals because they feel that exposure will cause company officials to more carefully weigh the alternatives before acting.  It can also pressure the company to settle out of court when current employees are facing personal liability.

What can you do to limit manager liability?

A company’s employment practices liability insurance (EPLI) may include some support for cases where manager liability is alleged – but many policies don’t.

As a business professional – whether you’re an owner, C-level employee, manager, or HR – you need to prepare yourself for this risk.  We put together a comprehensive 9-page guide on how to do this called “The 5 Keys to Limiting Your Personal Liability Exposure.”  Click the button below to download it.