Beware personal liability for COBRA, FMLA, state bias law

As if life in HR weren’t hard enough, a federal court has clarified when you may be held individually liable for mistakes in administering anti-discrimination and benefit laws.

The news isn’t good.

Essentially, the court said, anyone making decisions on behalf of an employer must ensure that those decisions comply with the law. If you make a mistake, your personal assets may be at risk under certain laws.

Recent case: Bonnie Smith, age 56, sued her former employer and all the managers who had a hand in deciding to demote and then fire her. She claimed a trio of wrongs: age discrimination, failure to reinstate her after FMLA leave and failure to notify her of her COBRA rights.

The federal trial court dismissed her age-discrimination claims against the managers because individuals can’t be held personally liable under the federal Age Discrimination in Employment Act.

But the court let the case go forward against the managers under the Pennsylvania Human Relations Act (PHRA), the FMLA and COBRA. The court said that under the PHRA it’s illegal for “any person … to aid, abet, compel or coerce the doing of any act.” And the FMLA makes individuals “acting in the interest of an employer” individually liable.

Finally, if an employer doesn’t name a plan administrator to handle the day-to-day details of its health plan, COBRA holds the sponsoring employer responsible for complying with the notice requirements for continued coverage. That means someone in HR must make sure the notices go out on time. (Smith v. Genesis Ventures, No. 06-1473, ED PA, 2006)