To Defend or Not to Defend is no Longer the Question – Michigan’s Elliott- Larsen Civil Rights Act (“ELCRA”)

Often one of the more difficult problems confronting an employer is whether to pay for the defense of a supervisor in a lawsuit brought against both the employer and supervisor especially in lawsuits involving an employee’s discrimination claim under Michigan’s Elliott- Larsen Civil Rights Act (“ELCRA”). With the Michigan Court of Appeals’ recent decision in Jager v. Nationwide Truck Brokers, Inc., that troublesome decision no longer has to be made.

In Jager, a sexual harassment suit brought under ELCRA, the court overturned a seventeen-year precedent. Prior to Jager, the courts found that not only were employers liable for the discriminatory acts of their supervisors, but also that supervisors who engaged in such acts had personal liability as well. The Jager court found that the prior court interpretations of ELCRA were wrong and “had the Legislature intended individual liability, rather than employer liability under the ELCRA, it could have expressly stated so.”

Therefore, under this new ruling, supervisors who place their employers in legal jeopardy by committing discriminatory acts in violation of the ELCRA are no longer personally liable for their conduct only their employers will be liable. While this may seem somewhat unjust to employers, it matters not because employers have always been found to have joint and several liability with the supervisors. However, the good news is that the employer no longer has to decide whether to pay for a supervisor’s defense, because the supervisor can no longer be a defendant in such actions.

While the Jager court’s decision concerned only a supervisor’s liability under the ELCRA, it would seem apparent that the same result would occur for suits brought under Michigan’s Persons with Disabilities Civil Rights Act (“PWDCRA”). Although there have been only two cases, to date, where supervisor liability was discussed in PWDCRA cases, the finding of such liability in both cases was based exclusively on the prior court decisions finding supervisor liability in ELCRA cases. Under such reasoning, the Jager decision should be applied to PWDCRA cases as well.

An unfortunate aspect of Jager is that employers can no longer heighten supervisors’ awareness of their responsibilities to other employees by telling them that they can be sued and forced to pay money damages to their victims.