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HR Is Employer’s First Line of Defense Against Lawsuits

By J. Thomas Harrington and R. Scott Oswald   4/9/2014
 

Most companies employ human resources professionals in at least some capacity not only to administer their employee benefits programs, but also to assist the company in avoiding liability under federal and state employment laws.

HR professionals are truly an employer’s first line of defense against employment law claims like discrimination and retaliation. Under the law, when an employee reports illegal discrimination or retaliation, the employer has an obligation to exercise reasonable care in preventing and correcting any discriminatory or retaliatory behavior. HR professionals are frequently tasked with this obligation of investigating and resolving employees’ concerns.

These investigations and resolutions have a bigger impact than only stopping the problematic conduct.  Where an employee has suffered an illegal action, but the employer has taken reasonable care to stop the action, the employer may avoid being subjected to punitive damages. Punitive damages can far exceed an employee’s award for lost compensation, emotional distress or attorney’s fees.  

What if a Company Won’t Act?

However, it is also possible that employers may thwart HR professionals’ efforts to prevent illegal employment actions. For example, what should HR professionals do when they have determined that a high-producing manager is discriminating against a subordinate, and the company’s executives do not want to take action to avoid disrupting the manager’s stream of production?

First, an HR professional must remember that a company’s employees, including its human resources staff, are usually considered agents of the company and consequently, fiduciaries who owe their employers a strict duty of loyalty–in other words, they must always act for the benefit of the company. HR professionals often fulfill this duty by preventing illegal activity from occurring and rooting it out of the organization if it has occurred.  

So the HR professional should determine the proper course of action based on the conduct that has occurred, without regard to the individuals in question. The HR professional should clearly explain the conduct that has occurred (without taking into account institutional biases for or against any of the individuals involved), explain why the conduct in question is illegal and recommend a course of action to correct the conduct.

Because of institutional biases such as favoritism toward the company’s executives, individuals who bring in a substantial amount of money for the company or individuals who have worked for the company for a long time, companies may be reluctant to take action when discrimination has occurred.

Consider the following: a salesman brings in six figures in sales per quarter. The salesman’s secretary reports that he has been harassing her by demanding that she perform sexual favors for him in exchange for raises or bonuses, and he has even threatened her employment if she does not perform sexual favors for him. Furthermore, two co-workers overheard the salesman make several of these demands of his secretary. During HR’s investigation of the secretary’s complaint, her co-workers corroborate her story.

In such a situation, HR is clearly presented with illegal and corroborated quid pro quo sexual harassment. Clearly, the HR professional would recommend that quick and serious action be taken against the salesman and that the secretary be protected from the salesman’s sexual harassment and from retaliation for reporting his conduct. However, the company’s owner does not want to take action against the salesman because he brings in so much money for the company. So the owner tells the HR professional to do nothing and to fire the secretary if she complains again.

What should the HR professional do? He or she is faced with a conflicting obligation: It is essential to protect the company from legal liability for the salesman’s sexual harassment of the secretary, However, the HR professional will likely be subject to action  if he or she contradicts the company owner’s instructions.

The HR professional should consider how to insulate the company from liability in other ways. The HR professional could prepare and implement trainings on stopping and preventing sexual harassment in the workplace. The HR professional could also arrange for the secretary to be transferred to a comparable position. Additionally, the HR professional could develop protocols designed to eliminate opportunities for the salesman to sexually harass his secretary. If he is harassing her during late-night meetings, the HR professional could establish a protocol that all meetings after the close of business must be approved by a manager and must have more than two parties present.

Personal Liability Possible

HR professionals must always be careful to protect themselves in the instance of a company’s wrongdoing. In some situations, HR professionals may be subject to personal liability for the company’s inaction. Some state anti-discrimination laws provide for individual liability for persons who are in part responsible for the conduct at issue. If HR professionals do not take appropriate corrective action, they could be one of the people determined to be at fault.

Under New York law, for example, individual defendants may be sued in their personal capacities for discriminating on the basis of age or sex. An individual who participates in the conduct giving rise to a discrimination claim can be held personally liable, as can a person with an ownership interest or power to do more than carry out personnel decisions made by others.

Also, individuals can be held liable for discrimination claims under some federal laws as well. Under the Family and Medical Leave Act, for example, employers can be held liable for violations.  “Employer” is defined as “any person who acts, directly or indirectly, in the interest of an employer to any of the employees of such employer,” and therefore would directly pertain to HR professionals. 

So when encountered with a discrimination or retaliation claim, HR professionals must be careful not only to protect the company from liability for the claim, but must also be careful to protect themselves from liability for the claim as well. Such a difficult situation requires a tremendous amount of thought and analysis of all of the interests at stake, and calls for deft and sophisticated action from the HR professional.

J. Thomas Harrington and R. Scott Oswald are attorneys at The Employment Law Group, a Washington, D.C., law firm representing employees.

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