Employer Liability for Employee Acts
© Bob E. Lype, 2000
When is an employer liable to a third party because of something an employee has done (or failed to do)? Two particular theories of liability are most commonly encountered. One theory imposes liability on the employer "vicariously" on account of the employee's acts or omissions, while the other theory imposes liability directly upon the employer for its own acts and omissions.
When an employee commits an act "within the course and scope of employment" which results in injury to some third party, the employer is generally liable to the third party under the doctrine of "respondeat superior." This legal principle is based on the reasoning that an employee on his employer's business is an agent of the employer, so the acts and omissions of the employee are actually the acts and omissions of the employer. The employer is "vicariously" liable. So for example, when your employee is making a delivery and runs a red light, causing an accident resulting in property damage and/or injuries, to the extent your employee was at fault, you will likely be held liable. Of course, hopefully you have adequate insurance coverage.
Sometimes it is less clear when an employee is acting "within the course and scope of employment." For example, suppose the delivery driver had his accident when he was making a little detour to take care of a personal errand. Or suppose a managerial employee clearly violates company policy in dealing with a customer or another employee. In either case can the employee have been acting "within the course and scope of employment?" Unfortunately, the answers are not always clear, and these situations are usually decided on a case-by-case basis.
Negligent hiring or supervision
If the employee commits some crime which injures a third party, unknown to the employer, then surely the employer cannot be held liable, right? Once again, it depends. Most likely the employer will not be held vicariously liable under the respondeat superior doctrine, since the crime was clearly not part of carrying out the employer's business.
But instead of being held vicariously liable for the employee's acts, the employer could face liability for its own acts and omissions, and in particular its own negligence.
If an employer hires an employee with a criminal record for sexual assaults, and if the employer then sends the employee to make home deliveries, then the employer may not be acting prudently. If the employee goes into a home to make a delivery and commits a sexual assault, the employer may be liable. This is true whether the employer actually knew about the employee's past offenses (in which case the employer surely acted foolishly), or if the employer was unaware of the criminal past, but did not act reasonably in looking into the employee's background before hiring him.
This principal is not limited to criminal offenses. Suppose the delivery driver who ran the red light and caused the accident had a long history of driving accidents. Once again, the question becomes whether the employer acted reasonably and prudently in hiring the employee for a driving position. Were appropriate inquiries made? The question is not what the employee did, but whether the employer was negligent in placing him in that position. Of course, employers walk a thin line when checking into the references and background of a prospective employee.
The principles of "respondeat superior" and negligent hiring are the most common bases of employer liability for employee acts and omissions. The common sense advice is to have good liability insurance, to know your employees well, and to place them in jobs for which they are appropriately suited.