Episode 515: HR Nightmare – The Cost of Mismanagement

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Jennie: Hi, everyone. I’m Jennie McLaughlin. I’m CEDR’s Head of Compliance, and I’m here with CeCe Wilson, who is CEDR’s Head of Internal HR. Hi, CeCe.

CeCe: Hi, Jennie.

Jennie: And if you’re seeing us on any video, you may see our dogs on our laps.

CeCe: [laughing]

Jennie: Just having a nice day with the dogs in here today. [laughing]

CeCe: It’s Isla’s podcast debut.

Jennie: Yeah! Well, Mopsy has done a lot of these, so he’ll help her out.

[laughing]

Jennie: Well, we’re actually here to talk about something kind of interesting that a lot of managers and business owners don’t realize can happen, which is when an HR manager is actually held individually liable for actions taken at the place of employment. I think everyone knows that employees can sue their employer, but I can speak from experience having done this myself as an attorney, but you can also sometimes name individual roles in the lawsuit. There’s this thing in the law called vicarious liability, blah, blah, blah. A lot of cases it’s ultimately the employers who are responsible, but depending on the situation, the state and the law, that may not always be the case. It is actually not as uncommon as we may think for the manager to actually end up being found responsible and liable for it. So there was a case hitting the news where there was a Department of Labor case where a manager was held liable for unlawful retaliation and ordered to pay the ex-employee $25,000.

CeCe: Yikes!

Jennie: Yeah. I don’t think most people go into management thinking that they may be on the hook for thousands of dollars for some mistake that they take against an employee. What’s of note here is that usually people assume, “Well, these cases come out of those crazy states like California.”

CeCe: [laughing] Yeah. Right.

Jennie: “Or New York.” This was Indiana! Indiana is not not always the place, it’s not one of those states that has a million laws and it’s known for being employee litigious for this. So CeCe, you’ve been an HR manager for a long time. Have you ever had to pay $25,000 for one of your mistakes?

CeCe: [laughing] Thankfully, no. No, I haven’t. I have heard of this happening. I’ve heard of it more in relation to sexual harassment cases, just because there’s a pretty large burden of responsibility of preventing future cases, once you know about someone sexually harassing your employees. I haven’t heard being personally named in a case like this before, so this was unique and interesting to me.

Jennie: Yeah, I’ve definitely seen it happen more in things like sexual harassment because once the member of management knows or should know about something happening that raises the level of responsibility on the employer. But if it’s a particular person who maybe chooses not to do anything or does something but maybe the obvious wrong thing and things escalate, it can fall right back on that.

CeCe: Yeah.

Jennie: But here, since this came from the Department of Labor, we know this wasn’t discrimination. This was actually all about overtime, back at the beginning. So the employee sent an email to their HR manager, and this actually happened to be a dental office. So the case refers to them as an ‘HR Manager’. That may have been their title. Their title could also have been ‘Office Manager’ or anything similar. The title isn’t really what’s key here.

CeCe: Right. It’s not the title. It’s that this is the person able to make decisions about someone’s employment and able to make decisions in response to the employee’s complaint.

Jennie: Right. So here the employee emailed that person and said that they don’t think that people, and her in particular, was being paid overtime correctly and did say she would end up needing to contact the Department of Labor if it wasn’t resolved because they wanted to be paid correctly. So CeCe, if one of our employees tells you they’re not being paid overtime correctly, what would you do?

CeCe: Fire them.

Jennie: Obviously.

[laughing]

CeCe: I mean, the first thing that you’ve got to do is hear their whole complaint, take notes about what it is that they’re saying is going on and then investigate that. Look back through your payroll records or whatever it is that they’re complaining about and double check. Make sure that you really did pay them correctly and if you didn’t, fix it. If you did, you need to have a meeting with them and go over it, show them exactly how they were paid. Explain any discrepancies that they think that they’re seeing and that’s kind of the extent of it. There shouldn’t be anything else from that incident after resolving it one way or the other.

Jennie: Well, that’s not what happened here.

[laughing]

Jennie: So here, the manager did not respond and so the employee did in fact file a Department of Labor complaint and the manager then wrote the employee up. Found something to write her up for. That doesn’t seem to be part of what you said to do.

CeCe: [laughing]

Jennie: And then a couple of weeks later, the Department of Labor contacted the employer to tell them they needed to be investigating this. So what would you do after being contacted about an investigation?

CeCe: Probably contact an attorney.

Jennie: Yeah!

[laughing]

CeCe: That would be step one.

Jennie: Yeah. Well, here…I mean, they waited a week, but then the attorney manager threatened the employee with another write up. So I think they weren’t too happy about this. Then some time goes by and the employee finds out through her coworkers that the manager has been going around speaking very unprofessionally about her behind her back.

CeCe: Yeah, yeah. It’s a bunch of other employees, not even other managers and other downline employees.

Jennie: Yeah, just bad mouthing her. So then after hearing all of this, and I think assuming this is all retaliation, the employee put in a complaint about this in writing to the owner and then…Well what do you think…What happened at that point?

CeCe: Well what should happen is the owner should then open an investigation about what’s going on internally in their business to protect themselves and their livelihood.

Jennie: Yeah, the owner really should have looked at all of what was going on and probably realized there’s a big red flag here, maybe suspended the manager or something like that. Clearly something happened because the manager did issue an apology to the employee, but then the next week they fired her. But, you know, she got an apology so that counts for something?

CeCe: Yeah, well, that amounted to evidence that they did exactly what she was saying.

Jennie: Yes.

[laughing]

Jennie: So the Department of Labor is already investigating whether overtime was paid correctly, and I’m going to be honest, I don’t even remember whether they found out there was.

CeCe: Yeah. I don’t recall.

Jennie: Because the part of the case that hit the news was the Department of Labor added on a retaliation claim.

CeCe: And we should just preface that with: It doesn’t matter, even if they were paying her correctly, all the other things that happened afterwards are a problem.

Jennie: Yeah. Yeah and if they had been paying overtime incorrectly, the Department of Labor would have made them fix it, pay the employees the money that was owed, possibly pay interest on it, may have assessed some penalties, kind of like, you know, to teach the employee – Not the employee! – the employer a lesson.

CeCe: Yeah. [laughing]

Jennie: They have the right to issue penalties but in this case, $25,000 the HR manager is ordered to pay all because of the retaliation. Whether the employee was paid wrong or not to begin with.

CeCe: I’m guessing most office managers and HR managers don’t just have 25 grand laying around to pay to the employee that they retaliated against.

[laughing]

Jennie: So I guess what should we take from this?

CeCe: Well, you know, I want to point out that I think it’s interesting because we kind of see this misconception a lot, that in these states where there aren’t a lot of employee protective laws that you have all this leverage to do kind of whatever you want. The at-will termination thing is kind of misused sometimes in these states and this is a really good example of, yes, Indiana is an at-will employment state, but this was an illegal reason to terminate the person. So it’s really still not a free for all, even where there are not really restrictive laws in place that serve the employee.

Jennie: And this is also a really good example of how easy it can be for the employee to make a retaliation claim. I mean, here now…Obviously, the Department of Labor determined there was retaliation, but in some cases an employee may have made a complaint and they end up being terminated soon after for completely legitimate reasons. If they have already been coached on some issue and they’re not improving, you’re not prevented from taking action against someone for a legitimate reason, but that comes down to documentation being really important to show that you didn’t just start caring about this thing after they made a complaint or did something that was protected. Because if you only started caring about it after that, it looks like retaliation.

CeCe: Yeah and that can look like holding other employees accountable for the same behaviors, right? Like that’s a real easy get, if you are letting everybody else be 5 to 10 minutes late and you start writing this person up for their 5 to 10 minutes late, it’s pretty obvious that you’re doing it for a reason that’s probably related to a protected activity.

Jennie: Yeah. So again, that’s why you need to treat people the same and you need to document when you’re taking action or maybe even documenting reasons why you’re not and all of those things. Also, we are aware of the fact that people cry retaliation all the time. Retaliation isn’t going to get every manager $25,000 against them every time. The retaliation needs to be a result of something that the employee had legally protected right to do or there is some legal protection around it. So if I come in late every day and you write me up, “You’re retaliating against me for being late!”

[laughing]

CeCe: You’re allowed to do that.

Jennie: Because I don’t have some legally protected right to show up late because I can’t set my alarm clock. I mean, that’s kind of a crazy example, but, you know, not everything leads to a valid retaliation claim. There has to be something in the law around it that there is protection. But like CeCe said, the employee could be wrong about it. The employee could be claiming you’re paying over the overtime wrong. The employee could be claiming that another employee is being sexually harassed and they could end up being wrong because they misread the situation, but the employee who complained about it has protection because they have a right to report that.

CeCe: Right.

Jennie: And so, again, even if the employee was wrong, if they did something that had some legal protection around it, and they seem to have been punished for that, the employer and sometimes the decision maker, individual who may not be an owner, could be responsible for that.

CeCe: And, you know, this is the same for things like complaining because they think their pay is lower than other people’s or too low in general. I know that as employers, that’s never a fun conversation to have, right? But we can’t stop them from having it and same with talking about pay with their coworkers. We can’t stop them from having those conversations and taking disciplinary action against them for it, is exactly this scenario. That’s retaliation.

Jennie: It’s a legal retaliation and that’s something a lot of employers don’t realize. Employers have the right to talk about their pay with each other. So I guess the lesson here is, you know, I think here, there’s probably something where the HR manager, maybe they thought they were going to get in trouble for screwing up overtime pay, or maybe they just didn’t like this employee or something, but they didn’t like this all happening, and of course, anyone wouldn’t like a DOL investigation.

CeCe: Yeah.

Jennie: But they took it out on the employee and it was the exact wrong thing to do and it got them in a lot of trouble.

CeCe: Yeah, and unfortunate for this HR manager. How many of you run background checks and that’s certainly going to show up now. So, you know, these things can have some lasting repercussions that you don’t intend. I don’t know the motivations of this person. I think most of the time people aren’t meaning to retaliate against employees. They’re just trying to get their own job done and this person is kind of standing in the way of that, and so now what can I do to deal with them? And sometimes we don’t make the best choices about that, but you have to think about your own future and your own well-being, too. I don’t think any of us want this showing up on our histories.

[laughing]

Jennie: No, we don’t. I think that goes back to you need to be objective because while you’re in it, you may not realize that this may actually look really bad. So, you know, making big decisions is something that shouldn’t be done in a vacuum. So it’s a really good thing to have peers or someone like CEDR or a management team to talk these through on and to make sure it’s not you alone making a decision that may come back to bite you and your employer.

CeCe: And your family.

Jennie: Yes! And your family and your future career. Well, I think that’s it for today. I think the dogs did pretty well.

CeCe: Yeah. Ilsa did great. [laughing] Your contributions were…[laughing]

Jennie: She’s an expert already. She’s an expert. All right. Well, thank you, CeCe.

CeCe: Thanks, Jennie.

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