Officers can be personally liable for wrongful acts they take to benefit their company, even when those acts have been ordered by their superiors. For example, you, as the president of a corporation, are told by the CEO that the company cannot afford to pay its employees at this juncture and are asked to request the employees to work for free. Under New Hampshire’s wage and hour laws, you may be deemed to be an employer right along with the company and therefore be personally liable for the unpaid wages and possibly a doubling of those wages in liquidated damages, and attorney’s fees. In permitting an employee to work without being paid, the New Hampshire Department of Labor may very well find that you are personally liable for the wages if the company later cannot pay those wages.
If you as a company officer commit fraud or other criminal acts, even if you do not personally gain from those acts and even if you were “just following orders”, you could be both criminally and civilly liable. This liability could result in possible jail time and damages personally assessed against you. Similarly, if a company is not paying employment taxes to the federal government and you are the one who is directing those monies be used to pay other creditors instead of paying withholdings, you could be considered by the IRS as the responsible officer and be fined a 100% penalty equal to the amount of the unpaid withholdings.
If you are faced with the choice of doing a wrongful act or losing your job, you should speak to legal counsel to determine your rights and obligations. In the long run, it may be that keeping your job is a much more expensive option for you personally. The Nuremberg defense is rarely successful.
J. Daniel Marr is a Director and Shareholder at Hamblett & Kerrigan, P.A. His legal practice includes counseling businesses and individuals on a variety of legal issues and advocating on their behalf. Attorney Marr is licensed and practices in both New Hampshire and Massachusetts. Attorney Marr can be reached at [email protected].