Bruce’s Summary: Although this ruling occurred in the Second Circuit, other circuits including our own will be joining in the near future. So, HR Directors put on your Insurance coverage hats and find out what coverage you have through your organization if you are named as a defendant in a suit.
This circuit focused on FMLA leave and whether the HR Director met the burden of acting in the capacity of an “employer” as defined under the “economic-reality test.” The court noted that in the FMLA context, the economic reality of employment relationships exists if the putative employer controls in whole or in part the plaintiff’s rights under FMLA. Further, it found that even though the Vice President held ultimate termination authority, the HR Director played a key role in terminating the plaintiff. Something else appeared to be missing with the Vice President admitting to directing the HR Director to handle the dispute with plaintiff, rather than conducting an independent investigation.
What the HR Director did was what HR Professionals do, manage the process. Well the game just changed and the discussion concerning liability insurance should be on the agenda for the next staff meeting.
Two other points, make sure your team is trained and follows the process, it saves a lot of grief later.
A “Directors and Officers” policy will usually only cover board members and other identified executives An “Executive Protection” policy will cover more management personnel and an “EPL-Plus” would possibly cover the whole management team. Again based on what the organization is willing to pay now or later. “None of the information contained herein should be construed as legal advice, nor are Calvin Associates consultants engaged to offer legal advice. If there is a need for legal advice, please contact and seek the advice of independent legal counsel.”