By Mark Adams
In a case of first impression, a Massachusetts Superior Court judge has ruled that the state’s Paid Family and Medical Leave law does not establish individual liability for managers and supervisors.
The case involved a co-founder and CEO (Laughlin) of a company that operated discount retail stores (BinStar). The CEO was at odds with the company’s Board of Directors as to how to address mounting company debt. Among the Board members were two representatives from an investor in the company. In response to these financial challenges, the investor (by way of representatives on the Board), galvanized support to restructure the organization. In doing so, the Board obtained veto power over the company’s budgets and the actions of the CEO.
As financial struggles continued and potential insolvency became a possibility, the CEO faced increasing pressure from the Board members. Ultimately, the pressure had effects on the CEO’s physical and mental health; leading him to go out on a Massachusetts Paid Family and Medical Leave. Yet, despite the leave, the Board did not appoint anyone to act as CEO during the leave of absence. Rather, during the medical leave of absence, the Board members made numerous contacts (over 65 messages) with the CEO to get him to work during his leave on matters such as trying to get him to sign dissolution consents, handling 401(k) tasks and other matters. Ultimately, the organization was dissolved while the CEO was still out on leave.
The CEO sued, asserting that the Board members interfered with his PFML rights and retaliated against him.
In its decision, the court’s analysis squarely addressed whether PFML’s definition of “employer” extends to individual managers and supervisors (which in this case were the Board members). In analyzing the statute, the court looked at other Massachusetts statutes (most notably the Massachusetts Wage Act Chapter 149, §148 which had expressed language to include various managers and officers and agents to be included as part of an employer for purposes of that law. Noting that such comparable language was not present in the state PFML law, the court decided not to read or import that language into the PFML law: “The statutory requirement to provide PFML leave in appropriate cases, and the statutory prohibition of discrimination against an employee who exercises his rights under the PFML statute, rest on the employer. They may not be enforced against investors or board members.” (Laughlin v. BinStar, Inc.)
[Editor’s Note: While this decision is welcome news for a company’s managers and officers, remember that all leave laws are limited in that way. For example, the federal Family and Medical Leave Act as well as the Connecticut and Rhode Island FMLA leave laws can reach out with individual liability. Therefore, as always, organizations need to remember both the federal and state implications that could potentially overlap when they weigh their actions.]