Brother, Can You Spare a Dime?

Strategies Managers Can Implement To Avoid Personal Liability

When I was in college, I worked as a waitress at a local restaurant. I loved working as a waitress because the harder, faster, smarter I worked, the more tips I made. It was instant financial remuneration in direct relationship to the effort I put forth. As is often the case, my hard work and diligence was noted by the restaurant owner and I was offered a job as “manager.” At 19, I knew already, that despite the promotion and title, I would actually make less money as a manager than I did as a server. I also knew there would be more “responsibility” and “liability” with that title, though at 19, I doubt I understood the magnitude of those terms. “Did managers get paid ‘enough’ considering the risks?” I wondered.

Then again, that was only a “job” for me. It wasn’t my “career.” For most people in management, their management role is their career and they take it very seriously. Moving up and forward in a company is significant and compensation is not the only factor workers evaluate when considering a move into management. Certainly, there are many managers who feel that they do not get paid “enough,” especially considering the difficulties inherent in managing people. But, in my opinion, no manager gets paid “enough” for the risk of personal liability. Personal liability is the financial punishment that a court imposes on a manager, personally, for intentional acts which are deemed outside the scope of the employer-company’s policies and which cause harm to that manager’s subordinate.

Personal liability is intended to hit the manager in his or her own pocket. And it hits hard. In Roby v. McKesson, No. S149752 (Nov. 30, 2009), a California Supreme Court case, the jury during the trial court phase punished Roby’s manager personally with a liability of $500,000 in compensatory damages and $3,000.00 in punitive damages for her harassment of Roby. Roby’s manager ostracized her and called her disgusting for her body odor and arm scabs. The jury was ensuring that the person who caused the most harm to the victim paid for it personally. Presumably, $500,000 was much more than Roby’s manager made in a year.

That is why it is more important now than ever, especially in California, where personal liability exists for harassment, that managers know how to proactively prevent the circumstances that give rise to most lawsuits from their employees. Managers are not just responsible for helping the company avoid lawsuits; they now need to protect themselves too. The critical Proactive Lawsuit Prevention Strategies that managers must learn to avoid personal liability are:

1) A manager must learn how to document discipline and show progressive discipline when the employee he or she manages exhibits performance problems or behavioral misconduct. This critical strategy will insulate the manager from a claim that they acted to harass the employee showing that discipline or termination was well thought out, objectively justified and “not personal or harassing.” That is, when an employee is performing below standards, he or she is given a documented verbal counseling first, then a written counseling, then a last chance warning (or suspension with pay), etc. on a progressive scale, getting harsher as the disciplinary actions grow more frequent. The true purpose of progressive discipline is to give the employee many opportunities to improve performance. To protect against personal liability, managers should work in teams or with human resources/in-house counsel to ensure that their documented disciplinary actions are objective (not personal) and are based on measurable criteria. An objective review by the manager’s teammate or HR will ensure that the reasoning behind disciplinary action is not based on stereotype of discriminatory reasons. This team approach or peer review also protects the manager from personal liability because it guards against the perception that one manager singled out one employee with malice to harass.

2) A manager must learn how to use technology and not to get “used” by it. That is, in this day and age, many new cases are arising from the misuse of technology by managers. That is, new employment cases are citing inappropriate emails, the use of intranet and internet, social media, texting as the “smoking gun” evidence which proves a manager’s unprofessional, stereotypical or harassing intent. Managers must be trained, specifically, on the use of email. First, they must understand that email and other technological means of communication are discoverable and can be used as evidence in a lawsuit. They must learn, specifically, that all technological communication must have a professional, not conversational tone. There should be a clear understanding about when it is inappropriate to use email. For example, there are very few circumstances when it is justified to discipline or terminate an employee by email. This is a conversation, though difficult, that must be done in person. Responding to “flaming emails” or emails sent in anger from subordinates or coworkers should be well thought out and peer reviewed before sent. “Flaming emails” are bait for managers. Often a response when necessary to a “flaming email” should first be reviewed by counsel before sent. Managers should know not to have personal or sexual conversations on company owned devices. Finally, managers should understand that all technology leaves a blueprint. That, once it is written, even if it is deleted at a later time, it can be retrieved and used as plaintiff’s exhibit A, to show the manager had a malevolent intent against the plaintiff employee. Once this is proven, it is hard to avoid personal liability.

3) A manager should learn the critical importance of giving accurate performance appraisals. Performance appraisals are accurate reflections of an employee’s performance. The content of an annual performance appraisal should not be a surprise to the employee because the manager has addressed the performance issues on an ongoing basis with the employee as the performance events occur. Many employee lawsuits come out of an employee’s anger or a sense that he or she was terminated or disciplined unfairly. That is, they didn’t see it coming or they had no chance to improve. Sometimes, the employee has been told that he or she was performing satisfactorily or was even given raises. Accurate performance appraisals prevent employees from reaching the level of “disgruntled” or angry enough to hire a plaintiff’s attorney or assign blame to their manager.

4) A manager needs to know when to stop talking about a former employee. Many managers think that once an employee has left a company that the truth can come out. That is, once the employee is terminated, the manager begins to tell the story as to why that employee “had to go.” Managers must understand that it is usually after the employee has left a company that the employee contemplates a lawsuit. A manager’s unkind words, post-termination references that injure the employees ability to get work, and allegations of misconduct can give rise to claims against the manager for defamation, tortuous interference with future contract and intentional infliction of emotional distress claims, all of which can be made against the company but also against the manager, personally, with unlimited punitive damages.

5) A manager must find alternative and healthy ways to handle stress or anger. As in the case of Roby v. McKesson, courts award personal liability against managers who are purposefully hurtful and unkind to the employees they supervise. The best way to avoid personal liability as a manager is to treat employees consistently, avoiding any inference of favoritism and to find a constructive way to deal with stress in the workplace. Any display of anger or targeting frustration on employees is “asking for it.” Last, any name calling or personal attacks, especially in front of coworkers will be seen as intentional and harassing. As a manager, whether you act out anger in public against your own employees or you witness another manager doing the same, it is your responsibility to help solve this problematic behavior before it manifests into litigation.

Many managers, when faced with accusations of harassment or intentional tortuous acts are shocked and surprised that an employee targeted them in a lawsuit. Implementing the aforementioned proactive lawsuit prevention strategies will help protect managers from these allegations and the stress inherent in defending their workplace conduct.