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| Risk Management |
| Personal Liability: Will an employment lawsuit drain your personal retirement savings? |
One of the reasons enrolling with a PEO helps you sleep better at night is that we are able to help you identify and eliminate business practices that put you at risk for an employment lawsuit. Managers, supervisors, and owners of a company can use an extra measure of caution to help assure that they are not held personally responsible in the event of a lawsuit.
Some Federal laws are written in such a way that the employer (meaning the firm) is usually held liable for violations. These include the ADA, the ADEA, and Title VII of the Civil Rights Act. But with other laws, specifically the Family and Medical Leave Act (FMLA) and some FLSA (Fair Labor Standards Act) regulations, the law is not as clear. This leaves a disgruntled employee the option of naming an individual to be responsible to pay legal fines.
Recently, for example, a hospice care nurse was discharged from her position soon after she announced that she was suffering from cancer. The nurse named her direct supervisor along with the hospice care agency in a discrimination lawsuit. Plaintiffs typically name individuals in a lawsuit for three reasons, according to Michael D. Karpeles, head of a Chicago firm specializing in employment law. These include:
- A hope to tap deep pockets, since the owner or manager may have insurance to cover a judgement
- A personal vendetta
- As a strategic move to force a settlement
The solution, according to Karpeles is also three-fold.
- “Make sure the bylaws of your company provide for indemnification of owners and officers if they’re dragged into court in an employment case.”
- Take extra precautions to avoid lawsuits in the first place.
- Be evenhanded in discipline and keep thorough records of disciplinary actions.
Our on-staff human resources specialists are trained to counsel you about making wise employment decisions. Let us help you take steps to assure that a lawsuit won’t destroy your company. Do not hesitate to consult legal counsel when you deem it necessary.
(Source: Bahls, Steven C. and Jean Easter Bahls. “Taking the Fall.” Entrepreneur.)
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