Employer Liability for an Employee's Bad Acts

If your employee hurts someone, you could be legally responsible.

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In some circumstances, your company may be legally responsible for harm caused by its employees. Under a handful of legal theories, courts have held employers liable for injuries their employees inflicted on coworkers, customers, or total strangers. Here, we explain those legal theories -- and a few commonsense steps you can take to steer clear of trouble. (For more information on handling potentially dangerous workers, see Dealing With Problem Employees: A Legal Guide, by Amy DelPo and Lisa Guerin (Nolo) and The Essential Guide to Workplace Investigations, by Lisa Guerin (Nolo).)

Job-Related Accidents or Misconduct

Under a legal doctrine sometimes referred to as "respondeat superior" (Latin for "Let the superior answer"), an employer is legally responsible for the actions of its employees. However, this rule applies only if the employee is acting within the course and scope of employment. In other words, the employer will generally be liable if the employee was doing his or her job, carrying out company business, or otherwise acting on the employer's behalf when the incident took place.

The purpose of this rule is fairly simple: to hold employers responsible for the costs of doing business, including the costs of employee carelessness or misconduct. If the injury caused by the employee is simply one of the risks of the business, the employer will have to bear the responsibility.

But if the employee acted independently or purely out of personal motives, the employer might not be liable. Here are a few examples to illustrate the difference:

  • A restaurant promises delivery in 30 minutes "or your next order is free." If a delivery person hits a pedestrian while driving frantically to beat the deadline, the company will probably be legally responsible for the pedestrian's injuries.
  • A technology services company gives its sales staff company cars to make sales calls. After work hours, a sales person hits a pedestrian while using the company car to do personal errands. Most likely, the company will not be held responsible for the incident.
  • A law firm issues cell phones to all of its lawyers, to allow them to call into the office and check in with clients when they are on the road. A lawyer, driving, hits a pedestrian because she is completely engrossed in her telephone conversation with a senior partner in the firm. The law firm will probably have to pony up for the pedestrian's injuries.
  • A medical billing company hires a fumigator, who sprays the company's office with powerful pesticides. The next day, a dozen employees fall ill from the fumes. One of the affected employees is sent home; on her way, she suffers a dizzy spell and hits a pedestrian. The company is probably on the hook.

If you are sued under this legal theory of respondeat superior, your employee's victim generally won't have to show that you should have known your employee might cause harm, or even that you did anything demonstrably wrong. If your employee caused the injury while acting within the scope of employment, you will have to answer to the victim.

Tip Workers' compensation generally protects you from lawsuits by injured employees. If an employee injures a coworker while acting within the scope of employment, the coworker probably won't be able to sue your company. Instead, the coworker can make a workers' compensation claim to receive payment for lost wages, medical bills, and so on. Employees can sometimes sue outside the workers' compensation system if their injuries were caused by their employers' intentional misconduct, but that generally won't be the case if they are hurt by another employee who is simply doing his or her job.

Careless Hiring and Retention

Under a different legal theory, someone who is injured by your employee can sue you for failing to take reasonable care in hiring your workers ("negligent hiring") or in keeping them on after learning the worker poses a potential danger ("negligent retention"). This rule applies even to what your workers do outside the scope of employment -- in fact, it is often used to hold an employer responsible for a worker's violent criminal acts while working, such as rape, murder, or robbery.

However, under this theory you are legally responsible only if you acted carelessly -- that is, if you knew or should have known that an applicant or employee was unfit for the job, yet you did nothing about it.

Here are a few situations in which employers have had to pay up:

  • A pizza company hired a delivery driver without looking into his criminal past -- which included a sexual assault conviction and an arrest for stalking a women he met while delivering pizza for another company. After he raped a customer, the pizza franchise was liable to his victim for negligent hiring.
  • A car rental company hired a man who later raped a coworker. Had the company verified his resume claims, it would have discovered that he was in prison for robbery during the years he claimed to be in high school and college. The company was liable to the coworker.
  • A furniture company hired a delivery man without requiring him to fill out an application or performing a background check. The employee assaulted a female customer in her home with a knife. The company was liable to the customer for negligent hiring.

Avoiding Claims of Negligent Hiring or Retention

Many states have allowed claims for negligent hiring and negligent retention. Although these lawsuits have not yet appeared in every state, the clear legal trend is to allow injured third parties to sue employers for hiring or keeping on a dangerous worker. What can you do to stay out of trouble? Here are a few tips:

  • Perform background checks. Make it your policy to run a routine background check before you hire an applicant. Verify information on resumes, look for criminal convictions (to the extent allowed in your state), and check driving records. These simple steps will weed out many dangerous workers and help you show that you were not careless in your hiring practices. For more information on checking out applicants, see Nolo's article Running Background Checks on Job Applicants.
  • Use special care in hiring workers who will have a lot of public contact. You are more likely to be held responsible for a worker's actions if the job involves working with the public. These workers all require more careful screening:
    • workers who go to a customer's home (to make deliveries, perform home repairs, or manage apartment buildings, for example)
    • workers who deal with vulnerable people such as children, the elderly, or people with disabilities, and
    • workers whose jobs give them access to weapons.
  • Root out problem employees immediately. Under the theory of negligent retention, you can be responsible for keeping a worker on your payroll after you learn (or should have been aware) that the worker poses a potential danger. If an employee has made violent threats against customers, brings an unauthorized weapon to work, or racks up a few moving violations, you have to take immediate action.
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