Defend against being sued personally for your mistakes

Issue: In addition to suing the organization, employees may go after you personally in court.

Risk: Certain federal employment laws allow employees to sue their individual managers and HR reps, opening you up to financial ruin.

Action: If you are sued, follow these tips below.

It is (or should be) every supervisor's and HR director's worst nightmare: Not only has a disgruntled employee sued your company, he's now gunning for you, too.

Think it can't happen? It can and does, with alarming frequency.

Lawyers believe that two pockets are better than one. And certain federal employment laws, including FMLA and the Fair Labor Standards Act (FLSA), allow employees to personally sue supervisors who violate the law. To complicate matters, some state laws say supervisors can be held personally responsible for discrimination.

The FLSA. Because this key wage-and-hour law defines employer as "any person acting directly or indirectly in the interest of an employer," the Labor Department and federal courts have consistently said that individuals can be liable for FLSA damages.

FMLA. The federal family-leave law contains a similar definition of employer. For that reason, several courts have held supervisors personally liable for violating the FMLA.

Most federal circuits have nixed the idea of personal liability under other federal employment laws, such as the ADA, because those laws don't define "employer" to include an "individual." But, even in those cases, supervisors can be found liable under state employment laws.

Case in point: An employee successfully sued Wal-Mart and a pharmacy supervisor under the ADA and a New York state disa-bility bias law. The jury made both the company and the supervisor liable for $9,000

in economic damages and a whopping $2.5 million to compensate the employee's mental anguish. (Brady v. Wal-Mart)

Best defense: prevention. By the time a lawsuit hits, it's usually too late. So, make sure you and your organization's supervisors understand how to comply with the key employment laws, including the FLSA, the Civil Rights Act, the FMLA, the ADA and state and local employment laws.

Just as you document employees' performance, be sure to document your own decision-making process. If you give advice to others and you are ignored, document what you recommended. Your notes may end up being your best personal defense.

What to do if you’re sued personally

1. Contact counsel. Talk to your organization's legal office and your attorney immediately. Lawsuits include strict time limits in which you must answer. Missing a deadline can mean instant liability.
2. Contact the company insurance carrier. Insurers often provide counsel and they work closely with company attorneys to prepare a defense. If you carry individual liability coverage, this is also the time to contact your insurance agent.
3. Clarify who will defend you. Find out if your organization will supply and pay for your defense. Most companies will stand behind you if you were acting on their behalf. If you have an employment contract, review it to see if you'll be indemnified for any damages you are ordered to pay. If you have no written contract, try to secure the organization's intentions in writing.
If the case settles, make sure the settlement covers your personal liability as well as the organization's. This is another reason to have a separate attorney review the documents.