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Individual Liability in Discrimination Cases
Kristine M. Kroeker and David W. Arnold, Esq.
Reid Psychological Systems
The issue of whether individual employees can be held personally liable in discrimination cases under the American with Disabilities Act (ADA) was recently addressed by the United States Court of Appeals, Seventh Circuit. The issue of personal liability, one which is not exclusive to the ADA, had been decided differently by various district courts within the Seventh Circuit.
There have also been five other Circuits which have addressed the issue of individual liability under other federal anti-discrimination acts; Title VII of the Civil Rights Act and the Age Discrimination in Employment Act (ADEA). The ADEA and the Civil Rights Act are relevant to this issue because their definitions for the term "employer" closely mirror that of the ADA. Under the ADA, an "Employer" is "a person engaged in industry affecting commerce who has 15 or more employees for each working day in each of 20 or more calendar weeks in the current or preceding calendar years, and any agent of such person." Four of the Circuit Courts have rejected individual liability under these acts and one has recognized it. The Courts rejecting individual liability have generally focused on Congress' intent to limit liability to businesses with 15 or more employees.
In U.S. Equal Employment Opportunity Commission and Wessel v. AIC Security Investigations, Ltd. and Ruth Vrdolyak, 55 F.3d 1276 (7th Cir. 1995), the Court held that although the employing entity was liable for discrimination under the ADA, the individual employer (Mrs. Vrdolyak), named as a defendant, was not. This opinion reversed the decision rendered by the lower, district court which had sided with the Equal Employment Opportunity Commission's (EEOC) argument that both parties (AIC Security and Mrs. Vrdolyak) were liable for discrimination under the ADA.
By holding in favor of Mrs. Vrdolyak, the Seventh Circuit noted that, in passing the ADA, Congress obviously wished to protect small entities (i.e., companies with 15 or less employees), which was evident in the Act's limited jurisdiction to companies with 15 or more employees. Such a lower limit existed, the Court stated, because Congress wished to establish, "a balance between the goal of stamping out all discrimination and the goal of protecting small entities from the hardship of litigating discrimination claims." In light of such logic, the Court reasoned that if Congress sought to protect small employers with limited resources from liability, it certainly would have intended to protect individual employees from civil liability under the ADA.
In further support of its holding, the Court also noted that, "The original design of damage awards under the ADA, Title VII and the ADEA buttresses our conclusion. Until 1991, a successful plaintiff could recover only back pay and equitable relief such as reinstatement." Such remedies are exclusively provided by employing entities -- not individual employees.
The court in Wessel also reasoned that if individual liability was intended by Congress, they would not have created the system of caps in the Civil Rights Act of 1991 which limits the amount of monetary recovery under the ADA and Title VII by placing caps on the total amount of compensatory and punitive damages. The sliding scale of caps applies the lowest cap to companies with 15-100 employees. Since there are no caps for individuals, the court reasoned that Congress' intentions were clear--individual employees cannot be liable in discrimination cases.
Plaintiffs attempted to argue that since the Civil Rights Act of 1991 allowed for compensatory and punitive damages, Congress must have changed the damage structure to allow for individual liability. However, the Court stated that it was "a long stretch" to assume that Congress "silently" changed its "earlier vision through an amendment to the remedial portions of the statute alone."
The EEOC and plaintiff Wessel also argued that because "employer" is defined to include "a person...and any agent of such person," Mrs. Vrdolyak as president of AIC was an agent and hence, individually liable. In responding to this argument, the Court stated that "Contrary to the EEOC's and Wessel's argument, the actual reason for the 'and any agent' language in the definition of 'employer' was to ensure that courts would impose respondeat superior liability upon employers for the acts of their agents."
Finally, the EEOC and Wessel argued that individual liability is essential to prevent supervisors and other company personnel from violating the ADA. In characterizing the plaintiffs' argument as "Chicken Little-esque", the Court noted that companies have adequate incentives to train employees to avoid unlawful actions and appropriately discipline those who do not comply with the law.
The Seventh Circuit relied on several other Circuit opinions in reaching their decision in the Wessel case. Specifically, in, Grant v. Lone Star Co., 21 F.3d 649 (5th Cir. 1994), the Court of Appeals reversed a district court decision which had held a branch manager liable for sexual harassment, not as an employer, but personally because he condoned and encouraged the acts of other workers that contributed to a hostile work environment. In concluding that Title VII does not permit imposition of liability upon individual employees, the Court noted that the Act specifically provides that damages be paid by the "employer, employment agency, or labor organization" responsible for the unlawful employment practice. 42 U.S.C. ( 2000-5(g)(I).
Consistent with the opinion in Grant, the Ninth Circuit Court of Appeals has refused to hold individual employees liable under Title VII and the ADEA. See Miller v. Maxwell's International Inc., 991 F.2d 583 (9th Cir.1993). In its opinion, the Court reasoned that "If Congress decided to protect small entities with limited resources from liability [Title VII - employers with less than 15 employees, ADEA - employers with less than 20 employees], it is inconceivable that Congress intended to allow civil liability to run against individual employees." See also Smith v. Lomax, 45 F.3d 402 (11th Cir. 1995).
The Court in Miller also addressed the argument that without individual liability, supervisory personnel would believe that they can violate anti-discrimination statutes with impunity. Specifically, the Court reasoned that an employer which incurs civil damages because of an employee's actions will certainly take appropriate steps to correct such a belief. Also, in Birbeck v. Marvel Lighting Corp., 30 F.3d 507 (4th Cir. 1994), the Fourth Circuit recognized that personal liability under the ADEA "would [inappropriately] place a heavy burden on those who routinely make personnel decisions..."
Although the Wessel court did identify one Circuit Court opinion which recognized liability under Title VII, it noted that the basis for liability was merely recognized in passing, and therefore was not considered persuasive. See Jones v. Continental Corp., 789 F.2d 1225 (6th Cir. 1986).
In conclusion, five Circuits have extensively considered the issue of individual liability and concluded that federal anti-discrimination statutes do not permit the imposition of such liability. In contrast, only one Circuit has held in favor of individual liability and it did so in dealing with a minor and collateral issue. In light thereof, there is apparently strong precedent that employees are shielded from personal liability under the ADA, ADEA and Civil Rights Act.
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2006 Society for Industrial and Organizational Psychology, Inc.
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