Have both the company and a manager been sued?
If an employee is responsible for the conduct, then both the employer and the employee may be sued
An employee may sue both his employer and an individual employee responsible for the alleged wrongdoing.
If the alleged conduct occurred while individual employee who is sued was acting in the course and scope of employment, joint representation is a cost-effective way for an employer to satisfy its obligation to indemnify all employees acting lawfully and within the scope of employment. Joint representation is also an effective means to present a unified defense and ensure an alleged discriminator’s cooperation in the litigation.
However, if it appears more likely than not that the individual employee acted wrongly and outside the scope of employment, then joint representation will not likely be possible due to potential conflicts of interest between the employer and employee. Furthermore, an employer most often will not be obligated to indemnify employees for conduct that has occurred outside the scope of employment.
Joint representation of the employer and the sued employee
If, after consulting with the employer, the employer’s attorney perceives no conflict of interest between the employer and employee then a consent letter will be prepared that discloses the potential conflicts of interest, the reasons for and against joint representation, and the legal implications of both joint and separate representation.
The letter will advise the parties of their right to consult separate attorneys before agreeing to joint representation. If a conflict of interest arises during the joint representation, both parties will be required to obtain separate counsel or the individual employee will have to retain separate counsel, which the employer may pay for notwithstanding its right to seek indemnity for the costs of defense and any judgment or settlement.
If the employer will pay all fees on behalf of both the individual employee and the employer, the agreement will contain a disclosure of the foreseeable consequences of the payment arrangement to all clients involved in the representation. The letter should contain an express provision that all parties to the agreement agree by their signatures to waive all conflicts of interest.
If the parties agree to joint representation and at a later point, a conflict of interest arises, the parties will be required to retain separate counsel. All communications made in the course of the joint representation remain subject to the attorney-client privilege unless it is waived.
Separate representation of the employer and the sued employee
On the other hand, if separate representation is advisable, then the employer’s attorney will inform the individual employee in writing that he or she should seek or will be provided separate counsel.
The employer will have to decide whether to advance the employee defense costs and attorney’s fees as they are incurred or, rather, to wait until the conclusion of the litigation for a determination whether the employee acted within the course and scope of employment. Of course, if the employer decides not to advance the defense costs and fees to the employee on a current basis, it runs the risk that the co-defendant employee will become uncooperative during the litigation and that he or she may even decide to allow a default judgment to be entered.