It has happened at places that Philadelphia-area HR director and consultant Crystal Spraggins, SHRM-SCP, has worked: The boss wanted her, as the HR manager, to do something sketchy or downright illegal. And Spraggins had to delicately find a way to explain why she couldn't comply with an executive's request—or less delicately, to find her way out of the situation or the job.

There was the manager who was unhappy that an employee, just before leaving the company, bungled a project and then took what the fuming executive believed was unwarranted paid time off. The manager wanted Spraggins to do a "reverse deposit," effectively clawing back money the company had already paid. 

Such a move is illegal, Spraggins said, noting that one needs the consent of the account holder to take money back. Even if the former worker had taken more time than was allowed, someone at the company had approved the time off. And the botched project? Those things happen, she said, and "are just the cost of doing business."

"Neither of those things were on the employee," Spraggins said she explained to the irate manager. "You can't just take it out of somebody's pay" retroactively. 

[SHRM members-only toolkit: Introduction to the Human Resources Discipline of Ethics and Corporate Social Responsibility and Sustainability]

Joanne Lee, SHRM-SCP, vice president for human resources at N.K.S. Distributors in New Castle, Del., says she knows of a manager who was obtaining prescription narcotics from an employee. The worker went to HR, worried about getting fired if the transactions stopped. The manager ultimately was fired, and the employee left shortly thereafter, Lee said of the situation.  "It all worked out well without the authorities being brought in," but she said HR would have called them if necessary. "At the end of the day, it is critical to step back and do the right thing," she added. 

Such situations may not be common for most HR managers, experts say, but when they do happen, they put HR professionals in an uncomfortable and sometimes untenable position. It's one thing when an employee is violating office policies or even the law—HR professionals may feel secure that upper management will support them in firing the employee or reporting the employee's actions to the police. But what's an HR manager to do if it is the boss who is pressuring either employees or the HR manager to do something unethical or criminal? 

"Your career comes first, before anything else. If you think something is unethical, you're probably right," said Lynn Taylor, a workplace expert and author of Tame Your Terrible Office Tyrant: How to Manage Childish Boss Behavior and Thrive in Your Job (John Wiley & Sons, 2009.) "Go with your gut. No boss is worth jeopardizing your career."

When a request crosses the line into an illegal action, the situation gets complicated, noted Scott F. Cooper, partner and co-chairman of the Labor and Employment Practice Group at Blank Rome LLP in Philadelphia. "The No. 1 guiding principle in this is that no employee should ever go along with the boss's request" if it's illegal, Cooper said. "You immediately become responsible yourself, and the boss may have a plan so he or she has plausible deniability."

In some states and industries, Cooper said, an employee or HR manager might have a legal obligation to report criminal behavior. For example, someone in a business covered by the federal Sarbanes-Oxley financial services regulatory law might have to disclose acts of wrongdoing to the authorities, he said. 

And if it turns out that an employee has personally profited from boss-directed malfeasance—for instance, by inflating sales numbers that end up increasing a worker's bonus—the employee may be fired and face criminal and civil penalties as well, he said.

Spraggins recalled another case in which a company was conducting random drug testing on employees. A computer algorithm selected the workers who were to be tested. 

An executive didn't like the computer-generated list and wanted to replace some workers with others suspected of having substance abuse problems. Not only did that idea make a mockery of the term "random," but it also opened the company up to charges of violating the Americans with Disabilities Act by targeting employees on the basis of their history with alcohol or drugs, Spraggins said. 

How to avoid—or at least defuse—such a situation? 

Start by creating an office environment that prizes ethics and accountability, experts say. 

HR should protect itself by having policies in writing and enforcing them, said Melissa A. Salimbene, an employment lawyer at Chiesa Shahinian & Giantomasi based in West Orange, N.J. 

And if a boss suggests something unsavory, "Don't panic," Salimbene added. Instead, "repeat the request back. Make sure you understood them. You can say, 'You've asked me to do this—is that right?' to make sure you've got it right," she said. 

The next move is to explain to the manager that a request violates a specific law or company policy. And while you're researching it, Salimbene said, keep it to yourself, in case there's nothing actually untoward about the request. "You could damage someone's reputation," she said. 

On the employee side, workers should be aware of whistle-blower hotlines and rules protecting them from retaliation. (Lee said the drug-providing employee and the manager were aware of this rule.) If the manager does not relent, go higher up the chain, experts say, whether that means the CEO, the board of directors or even law enforcement. 

Finally, be aware that the person who may end up leaving, voluntarily, is the HR manager. "If you work in the HR department for a company that is allowing this kind of behavior, I would suggest you look for a new job," said Kim Dawson, director of employee experience at the HR tech company YouEarnedIt in Austin, Texas. "Unethical and illegal behavior is not something you want to get caught up in, especially as the person who should be policing these situations." 

Susan Milligan is a freelance writer based in Washington. D.C.

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