Are CHROs Liable For Workplace Misconduct? #AskAnEmploymentLawyer to find out.

According to research from Aspect43, navigating compliance is one of the top reasons companies adopt HR technology solutions. Here at Fama, some of the top questions we get from prospects and clients are around compliance of online screening, social media screening, as well as workplace misconduct.

That’s why we’ve connected with Pam Devata – a partner in Seyfarth and Shaw, LLP’s Labor and Employment Practice Group and one of the nation’s top voices on the Fair Credit Reporting Act (FCRA) and state laws affecting employment background screening – to answer some critical compliance questions every corporate officer, HR, and Talent Acquisition professional needs to know.

In this article, Devata unpacks some questions around risk and potential liability – who is responsible for preventing workplace misconduct? What can organizations do to limit liability? and more.

What responsibility does an organization have to prevent workplace misconduct?

“It really does depend on the state,” Devata says. She continues, “depending on that specific state law, the real question is almost always did the employer have a duty to the person that was harmed? And, was that duty somehow breached?”

In Devata’s experience, legal action against a company related to workplace misconduct typically takes the form of a negligence claim, which may be anything from negligent hiring and retention to negligent misrepresentation or negligent screening. In terms of who, specifically, within an organization may be held accountable for a “foreseeable” instance of harmful misconduct, she states that it’s often a state-specific matter, but that “the law is really changing in that area.”

“We’ve seen and handled cases all over the country, frankly, where the burden is very, very high. That means that an employer will be deemed to have some sort of duty. But, the question is going to be how broad or narrow is the duty? And, where it is cut off isn’t always clear,” she said. “We’ve seen really broad interpretations of negligence law. A good example is New Mexico. In New Mexico, almost everything seems to be arguably foreseeable. Employers in certain jurisdictions really need to understand those different facets of the law.”

What organizational stakeholders are liable for workplace misconduct?

The question of a company's specific duty to protect employees from misconduct is a complicated one. It has recently come into focus following a Delaware court decision, which ruled that C-suite executives have a legal responsibility to oversee operations and may be held liable for failing to protect their workforce. Previously, liability was reserved for the board of directors. This is a big change. While this decision only applies to companies operating in Delaware, it’s important to note that Delaware is the home state to over 60% of Fortune 500 companies and a large number of small and mid-sized businesses, as well.

What steps can companies take to limit liability of workplace misconduct?

Beyond being thoroughly informed of any state-specific laws around negligence and oversight duties, Devata believes that there are some basic steps and best practices that any company can implement to protect against misconduct. That means companies are taking steps “to ensure that they are preventing things that are potentially preventable.” Moreover, these steps may be more important than ever as employers attempt to hire new talent quickly amidst ongoing labor shortages and increased competition.

“It’s challenging to get people hired quickly, efficiently, and effectively,” she said. “And there’s a friction there between getting someone in the door and onboarded quickly versus the appropriate screening that needs to happen.”

According to Devata, employers can reduce this friction through the use of screening processes and technologies that can be deployed efficiently and without increasing the risk of something concerning potentially falling through the cracks. This could include pre-qualification assessments and criminal background checks, as well as online and social media screening.

“Having a robust screening process at the beginning of any sort of engagement with either an employee or an independent contractor is very important,” she said.

Overall, it’s extremely important to understand the specific liability business leaders and board members have within each state and jurisdiction a company and leader is operating in. Organizational stakeholders, including CHROs and Chief People Officers, may be held liable in the event of fraud, theft, or violence in the workplace. The good news is there are steps companies can take to limit liability and protect themselves and their employees from harm.

To learn more about the legal ins-and-outs of preventing misconduct in the workplace, click here to access Fama’s recent white paper, “The Legality of Online Screening.”