Subscribe Ask the Editors Search Entire site Smallbiz Bookstore Msg. Stained Glass Overlay Turnkey Vending U.S. Mortgage Reduction World Traders Association Taking The Fall From owners to officers, sweeping lawsuits are bringing down entire companies.
Courts are divided.
That depends on which law the employee sues under and how the courts interpret its language. It's a long-standing legal principle that a business is responsible for the wrongdoing of those acting on its behalf, provided they're operating within the scope of their employment. What's not clear, according to federal laws, is whether small-business owners are personally liable for the wrongdoing of their managers, and whether the managers whose decisions supposedly broke the law can be made to pay relevant fines out of their own pockets. State employment laws are often no clearer. In a typical lawsuit, the individuals named have to go to court to get their names removed from the lawsuit, and the court has to examine the wording of the law and how previous courts have interpreted it before deciding whether or not to dismiss the individuals from the lawsuit.