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Employment Law: Personal Liability of Supervisors and Corporate Officers

Introduction
Although the primary target in most employment discrimination cases is the corporate employer, many lawsuits also name individual supervisors and corporate officers as defendants. Being named as a defendant in a discrimination lawsuit should be taken seriously by corporate officers and supervisors, because, if the complaining employee wins the lawsuit, the court may order individual corporate officers or supervisors to pay damages out of their own pockets.

Basis of Personal Liability for Employment Discrimination
Most courts have ruled that individuals cannot be sued under federal statutes prohibiting employment discrimination. Most states have their own fair-employment statutes, however, some of which apply to a broader range of employers and provide monetary remedies greater than those available under federal law. It is now common for employees claiming discrimination in employment to sue in state court under these state fair- employment statutes or to bring claims under these state statutes in federal courts along with claims under the federal statutes. Furthermore, some states allow employees to pursue claims of employment discrimination as personal injury actions, independent of any state nondiscrimination statute. Given the increasing prevalence and economic impact of employment discrimination litigation, the potential for individual liability under state law should not be ignored.

There has been some disagreement among the federal courts regarding whether individuals can be sued under federal statutes prohibiting employment discrimination. The disagreement involves the proper way to interpret the term "employer" as used in these statutes. Because, under most federal statutes, the definition of the term "employer" includes any agent of the employer, a number of federal courts have ruled that supervisory personnel can be sued as individuals under these statutes. In some cases, plaintiffs were allowed to proceed with suits against individual supervisors who had sexually harassed them or against management employees responsible for discriminatory employment decisions.

The general consensus among the federal courts, however, is that an individual cannot be sued under federal statutes prohibiting employment discrimination. The reasoning of these courts is, essentially, that if Congress had intended for individuals to be held liable under federal employment discrimination statutes, it would not have exempted smaller employers-usually those with fewer than 15 or 20 employees-from the coverage of the statutes.

In some state fair-employment statutes, the definition of "employer" is different from the definition found in analogous federal statutes. Some states define "employer" as any person employing one or more employees. Some state statutes further provide that the definition includes any agent of the employer. These statutes may, in turn, define "person" as any individual, partnership, corporation, or other entity. In such states, individual supervisors or management employees may, and often are, named as individual defendants in discrimination lawsuits.

For example, in one case decided under a statute with a definition similar to the one set out above, the court held that individuals who supervise and evaluate the plaintiff during his job tenure and who directly participate in the decision to dismiss him from his job can be sued as individuals. The court held that these individuals qualify as the employer's agents under the provision of the state statute defining an employer as a person with one or more employees including any agent of such person. In a number of other cases, courts have held that supervisors, or other individuals who meet the statutory definition of an employer, can be personally sued for participating in acts of harassment.

In addition to the potential for personal liability under state fair-employment practice laws, individual supervisors and other employees who directly participate in the challenged conduct may be sued for the personal injury the acts cause. Some states, for example, recognize a right to sue for wrongful or abusive discharge or for a discharge that violates public policy. In some cases, discharge based on race, sex, or certain other protected classifications can provide a basis for such a lawsuit. Some states also allow employees to sue for conduct by supervisory or fellow employees that is extreme and outrageous and causes severe emotional distress. A number of courts in different states have allowed employees to sue on this basis for racial or sexual harassment by supervisors or fellow employees.

Claims of discrimination brought under the state's personal injury law are usually considered independent of the state's fair-employment statutes, and, therefore, individual supervisors or employees may be sued even in states which do not allow lawsuits against individuals under their fair-employment statutes. Some state courts have held, however, that state fair-employment statutes are the only remedy for discriminatory conduct and that personal injury actions may not be brought based on conduct covered by these statutes. Most courts that have considered the question have found that an employee may sue under both the fair-employment statute and state personal injury law.

Conclusion
In addition to the concern for the effect of costly discrimination litigation on the company's bottom line, supervisors and corporate officers should not ignore the possibility that they may be sued individually for alleged acts of employment discrimination. Although most federal statutes prohibiting employment discrimination do not allow for individual liability, state fair-employment statutes and personal injury law may provide a basis for suing individuals in addition to the corporate employer. Therefore, supervisors and corporate officers should consider retaining experienced legal counsel to defend them against any personal liability and advise them on ways to prevent and/or limit such liability.

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