employee liability

Is Your Company Responsible for the Actions of Your Employees?

The unwelcome answer to this question is yes, under certain circumstances, an employer can be held liable for the conduct of its employees, even if the employer had no physical role in the harm that resulted. The reasons for this are that an employer is assumed to have direction over the actions of its employees and, therefore, by law (vicarious liability), the employer is held accountable for his employees’ actions. This is generally only true when the employees are acting within the scope and course of their duties. This is the main reason companies purchase employee liability insurance.

Types of Claims Brought Against Employers

The legal theories for the two most common types of claims brought against businesses for the wrongful actions of their employees are:

  1. Job related accidents or misconduct – if the harm is caused to another employee of the company, it will most likely be covered by worker’s compensation insurance. However, if harm is caused to someone outside the company, the employer will have to answer to the victim.
  2. Negligent Hiring and Retention – under this theory, you could be sued for not using reasonable care when hiring your employees, or for retaining them after finding out that they may pose a potential danger.

Protecting Your Business from Employee Misconduct Lawsuits

Your best approach in avoiding employee misconduct lawsuits is a two-pronged one:

  • Obtain adequate employee liability insurance through an insurance specialist
  • Implement an internal risk-management policy that addresses hiring practices, background checks, and ongoing reviews of your employees’ performance