Article Summary

Oswald

Cook

HR professionals are sometimes torn between doing what their company asks of them and what they know is right. If that's you, remember that it's not just the company that could get in legal trouble: In some situations, you could be held individually liable for your actions, too. Here our firm describes a few such scenarios; offers tips to HR people who want to minimize their risk of personal liability; and offers general advice on what to do if you're sued.

This article by TELG managing principal R. Scott Oswald and former associate Madeline Cook was published by The Employment Law Group, P.C. on December 10, 2021.

A: Yes — So Here’s How to Protect Yourself

By R. Scott Oswald and Madeline Cook

This article is adapted from a presentation that Mr. Oswald has given at two annual conferences of the Society for Human Resource Management.

You’re an ethical, well-trained HR professional — but sometimes you may get dragged into a situation that makes you queasy.

Perhaps you’re asked to fire an employee who has been vocal about unsafe work conditions, for example. Or maybe you notice that a sketchy manager has targeted only Black workers in a round of layoffs.

There are lots of reasons to push back, of course: To protect the company from legal consequences; because your professional training requires it; because of your personal moral code.

But here’s another reason: Depending on the law that’s being violated, you could be sued and held personally liable for any wrongdoing. You could end up owing a lot of money — or even being imprisoned, in a worst-case scenario.

How can you avoid such a fate without getting fired yourself?

And what happens if you do get sued?

FIRST, UNDERSTAND THE LAW

Certain workplace laws allow individuals to be sued, or even prosecuted criminally. Under certain circumstances, this may include HR professionals who participate in a decision that violates the law.

In a table at the end of this article, we’ve outlined some major employment-related laws and whether they allow for personal liability. It’s not a complete list — and depending on your location, you may be vulnerable under state law, too.

A few of these statutes may not surprise you: The Foreign Corrupt Practices Act, for instance. But did you know that HR people can be sued individually for violations of the Family and Medical Leave Act?

As employee-side attorneys, we mostly file complaints against corporations — not against individuals like you. However, there are exceptions. And some of our peers can be much more aggressive.

In general, you are vulnerable to legal action if you are an active participant in wrongdoing. More than many executives, HR professionals are held responsible for knowing what’s illegal. Especially if you have a professional certification, you have been trained on this stuff. You’re the person who’s supposed to throw a flag on shady practices.

Even if you’re a passive participant, you may still be at risk. If you’re named in a lawsuit, a judge will decide whether your liability must be weighed by a jury. In an FMLA case, for instance, the standard will be whether you had “sufficient control” of the situation to be held liable. Some questions that a judge will likely consider:

• Were you fully informed about what was happening?
• Could you have prevented the alleged violation?
• Did you advise against the alleged violation?
• Did you take any affirmative step to further the alleged violation?

In many cases, individual managers will be dismissed as defendants. If you’re not dismissed, however, you may face trial.

A FEW SCENARIOS

Let’s look at some examples. They are hypothetical, but they are based on real cases and possibilities.

Section 1981: Section 1981 of the Civil Rights Act of 1866 outlaws race discrimination. It differs from Title VII of the Civil Rights Act of 1964, a more recent law that doesn’t allow individual liability.

Imagine that a high-ranking executive at your branch office keeps drawing attention to a specific employee’s race — often in your presence. You always wince but let it slide. One day, irritated, the employee snaps back rudely and follows up with a complaint to you about the race-based comments.

You raise the matter with the executive, but he insists that the employee’s rudeness was insubordinate and should be written up. You reluctantly agree. The following week, the executive asks you to put the employee on a performance improvement plan (PIP) due to stagnant sales performance — which is technically true, but also is true of the entire branch staff.

The employee doesn’t meet the PIP targets, and the executive decides to fire her. He tells you to clear the firing with corporate headquarters. You relay the request without expressing any contrary opinion to HQ. The employee is fired, and files suit under Section 1981, naming you as a defendant.

Could you be held liable, even though you were mostly just silent? In our opinion, you could.

Courts have held that Section 1981 may apply to anyone who was “substantially involved at every stage” of a violation. Your discriminatory motivation still would need to be proved – but a judge might leave that question to a jury.

Family and Medical Leave Act: Imagine that an employee hurts his back playing sports, and will need surgery. He notifies you that he’s taking FMLA leave and will make a claim on the firm’s self-funded short term disability plan.

When you tell his manager, she’s irritated that the employee’s private behavior will hurt profits. Shortly afterward, she asks you to search the employee’s work computer for unauthorized material — a check that’s allowed by company policy, but which you’ve never performed before.

Upon searching the computer, you find evidence that the employee has been using it to visit porn sites, which is grounds for immediate dismissal. After conferring with the manager, you meet with the employee and terminate him before his scheduled surgery. He files suit under the FMLA, naming you as a defendant.

Again, we believe that you might end up facing trial: By performing a pretextual search and acting on your findings, you could be found liable for FMLA interference and retaliation.

Foreign Corrupt Practices Act: Your company doesn’t ship its products overseas and you wouldn’t dream of paying anyone a bribe. How could you be liable under the FCPA?

Well, imagine that your CEO goes to a party at a foreign embassy, where the ambassador promises to place a big order — if your company will hire his nephew. The CEO comes to you, explains the situation, and tells you to create a make-work position. You feel obligated to comply, since it’s the CEO.

Unfortunately for you, the Securities and Exchange Commission has said that a job, including for a family member, is “something of value” under anti-bribery laws. And a “willful” violation of the FCPA, even if it’s just aiding and abetting, can lead to a criminal conviction and up to five years in prison.

Even if you don’t get prison time, you could be fined up to $100,000 — which your company isn’t allowed to pay for you.

HOW TO LIMIT YOUR EXPOSURE

You weren’t the main bad guy in any of these hypothetical scenarios, we know. But you could have done more to minimize your personal risk — and to do the right thing.

Here are some tips:

• Never turn a blind eye to anything that looks like illegal behavior.
• In particular, never allow HR actions to be used as a tool for retaliation.
• Speak up, explaining the law and showing how illegal behavior puts the company at risk.
• Point to company policy and industry norms, and insist on following all official procedures — including by investigating every employee complaint.
• Don’t frame anything as a personal stand: Knowing and following these rules is literally your job description.
• Document your advice in writing at every step.
• Escalate to superiors if you are ignored.
• If there is disagreement, ask for an opinion from the company’s legal advisor: No competent attorney will endorse lawbreaking.
• If you feel obliged to act, protest in writing before moving ahead.
• If tensions keep rising, get some confidential advice from an employment lawyer.

None of this is easy — and in extreme situations, speaking up may cost your job. If you get fired for refusing to act illegally, however, all of these steps will position you for a legal action of your own. After all, anti-retaliation laws protect you, too.

Another option: Complain or blow the whistle to an outside authority. Never rule this out, especially if you are certain that people face danger or laws are being broken. Consult an employment lawyer before taking such a step, however; lawyers help you to avoid mistakes.

Plus, of course, the ultimate step: Look for a new job. You take your responsibilities seriously, and you deserve an employer who values your professionalism.

WHAT IF I’M SUED PERSONALLY?

Lawsuits happen, sometimes even when you do everything right. Hopefully you will be dismissed quickly as a defendant — but the process is never pleasant.

First, check to see whether your company or one of its insurers will pay for your defense. Standard business insurance typically doesn’t cover the defense of individual executives against claims such as discrimination, retaliation, harassment, or FMLA violations — but many companies buy supplementary Employment Practices Liability Insurance (EPLI), which typically does cover it.

Some EPLI policies don’t extend to non-executive HR professionals, however, or to part-time or leased employees. Many policies also exclude criminal defense or claims under specific laws. Read the fine print.

Regardless of their insurance situation, some companies indemnify all their employees for actions that are taken “in the course of employment.” In fact, this is required in some states. Check with your company’s legal advisor — or consult with an outside attorney.

Even if your employer is paying for your defense, tread carefully: The company’s interests may not always align with your own. Good attorneys will remind you of this fact; will emphasize that their core job is to represent the company; and will advise you to retain your own counsel if your interests diverge.

Remain fully engaged with your case. Don’t assume that the company is taking care of everything — and don’t blindly follow the advice of its lawyers. Consider asking for independent counsel, which may be covered at least partially by insurance, especially if there is strong evidence against you.

At a bare minimum, seek a second legal opinion at key decision points. Your professional reputation is at stake.

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R. Scott Oswald is the managing principal of The Employment Law Group, P.C. Madeline Cook is a former TELG associate.