Employers, and not the employees themselves, will often be held liable for the conduct of their employees. This is true even if the employer had no intention to cause harm and played no physical role in the harm. To understand why, you have to understand two basic concepts that underlie employer liability.
First, employers are seen as directing the behavior of their employees and accordingly must share in the good as well as the bad results of that behavior. By the same token that an employer is legally entitled to the rewards of an employee's labor (profit), an employer also has the legal liability if that same behavior results in harm.
Second, when someone is injured or harmed and needs to be compensated, who is the most likely to pay: the employee or the employer? Fair or not, the legal system is interested in making the victim whole, and assigning liability to the employer rather than the employee has the best chance of meeting that goal.
Employers are vicariously liable under the doctrine of "respondeat superior" for the negligent acts or omissions by their employees in the course of employment. The key phrase is "in the course of employment". For an act to be considered within the course of employment, it must either be authorized by the employer or be so closely related to an authorized act that an employer should be held responsible.
This means that there is a significant difference between an employee that causes a job-related accident and an employee who causes an accident while on the job that is unrelated to his or her employment. Courts sometime use the terms "detour" or "frolic" to signify the difference.
Example of a "Detour" and "Frolic"
A detour is a deviation from explicit instructions, but so related to the original instructions that the employer will still be held liable. A frolic on the other hand, is simply the employee acting in his or her own capacity rather than at the instruction of an employer. Here are some examples to illustrate the difference:
Finally, a special type of work-related accident occurs when one employee injures another employee while on the job. Workers' compensation protects you from being sued by your employee provided that the employee was acting within the scope of his or her job when the accident occurred. Instead of filing a lawsuit, the employee would submit a claim to receive payment for lost wages, medical bills, etc.
Negligent Hiring or Retention
Negligent hiring or retention liability, unlike job related misconduct, arises from acts performed by an employee outside the scope of his or her employment. The most common example of this is to hold an employer liable for the criminal conduct of an employee, which is obviously outside the scope of employment. The basis for liability is that the employer acted carelessly in hiring a criminal for a job that the employer should have expected would expose others to harm. Here are a few examples:
The key to most negligent hiring and retention cases is providing employees with access to potential victims without doing the necessary examination of the employees'. Accordingly, to avoid liability for negligent hiring, an employer should always run a background check on an employee, and be especially careful if the employee has contact with the public. If you as an employer become aware of something after the fact, then handle the matter immediately to avoid negligent retention liability.
Workplace harassment of employees by other employees has become an increasingly problematic source of business liability for employers. Workplace harassment violates federal law if it involves discriminatory treatment based on: race, color, sex (with or without sexual conduct), religion, national origin, age, disability, genetic information, or the employee's opposition job discrimination or participation in an investigation or complaint proceeding under the Equal Employment Opportunity Commission.
Workplace harassment does not include simple teasing, offhand comments, or isolated incidents that are not extremely serious. The conduct must be sufficiently frequent or severe to create a hostile work environment or result in a "tangible employment action," such as hiring, firing, promotion, or demotion.
Even if the harassment did not lead to a "tangible employment action," the employer can still be held liable unless it proves that:
To avoid workplace harassment liability, employers should establish, distribute and enforce a policy prohibiting harassment, and set out a procedure for making complaints. Preferably, the policy and procedure should be in writing. Small businesses owners may avoid liability through less formal means.
For example, if a business is sufficiently small that the owner maintains regular contact with all employees, the owner can tell the employees at staff meetings that harassment is prohibited, that employees should report such conduct promptly, and that a complaint can be brought straight to any supervisor or the business owner.
Conduct an Impartial Investigation
Finally, it is not enough to simply create a harassment policy. A business must also conduct prompt, thorough, and impartial investigations into any complaint that arises, and undertake swift and appropriate corrective action to fulfill its responsibility to "effectively prevent and correct harassment."
Get Legal Help with Your Questions About Employer Liability
Small business owners need to be familiar with the law surrounding "respondeat superior" or vicarious liability, whether you employ 10 or 100 employees. Even an honest mistake with respect to your obligations as an employer can be very costly and distract you from your core business. If you have questions about employer liability, or other employment law issues, it's a good idea to contact a qualified employment law attorney near you.