Employer Liability For Actions of Employees

The COVID-19 pandemic has many employers concerned about their liability for the actions of employees. Generally speaking, employers can be held liable for the actions of their employees based upon a theory of Respondeat Superior or Negligent Hiring/Supervision.

RESPONDEAT SUPERIOR AND VICARIOUS LIABILITY

Respondeat superior imposes vicarious liability on any third party that had “the right, ability, or duty to control the individual who caused a personal injury or property damage.” Typically, in order for Respondeat Superior to apply there must be an employer/employee relationship, and an employer is not held liable for the actions of an independent contractor. However, many employers misclassify employees as independent contractors, and just because a company classifies someone as an independent contractor does not mean the company can avoid liability.

Three factors are taken into consideration when determining if vicarious liability is applicable:
Was the individual causing the injury or damage an employee when the event occurred?
Was the employee acting within the scope of his or her employment?
Did the activities of the employee benefit the employer?
An employee’s conduct generally fits within the course and scope of employment if: (1) it is of a kind and nature that the employee is employed to perform; (2) it occurs substantially within the authorized time and space limits of the employment; (3) it is actuated, at least in part, by a purpose to serve the employer. In Pennsylvania, commuting to and from work is typically considered to be outside the scope of employment. However, there are exceptions. The Commonwealth Court of Pennsylvania noted that one of the exceptions to the “going and coming” rule is a traveling employee who has no fixed place of work.

With motor vehicle accidents, scope of employment determination can involve the “detour and frolic” test. A detour is a slight deviation from the task required by the employee (e.g., an employee making a delivery to a client travels a few miles out of the way to stop at her favorite diner). A frolic, on the other hand, involves a significant deviation from the employer’s instructions for the employee’s own benefit or personal gain (e.g., an employee making a delivery drives 25 miles out of his way to visit a friend). In the case of a detour, the employer could still incur liability, while a frolic does not typically lead to employer liability.

NEGLIGENT HIRING, RETENTION OR SUPERVISION
Even if an employee’s actions fall outside the scope of employment, an employer can still face liability under the legal theory of negligent hiring, retention or supervision. A claim for negligent hiring under Pennsylvania law requires proof that (1) an employer knew or should have known of an employee’s propensity for violence, and (2) the employment created a situation where the violence could harm a third party. Retaining an employee known to act in a manner dangerous to others may subject an employer to liability. An employer may also be liable for negligent supervision if it knew, or should have known, that an employee had dangerous propensities that might cause harm to a third party.

In addition to vehicle accidents, employers have been found to be liable for:
assault and battery committed by employees;
sexual abuse committed by employees;
theft and fraud committed by employees;
discriminatory actions of employees; and
workplace harassment perpetrated by employees.

MITIGATING EMPLOYER LIABILITY
An employer can take certain steps to reduce the likelihood of incurring liability for employees’ actions. One potential step is conducting a background check on prospective employees. (In doing the check, the employer must comply with the Fair Credit Reporting Act.) Before using background checks, an employer should consult an employment lawyer because different municipalities and states have enacted laws prohibiting criminal background checks entirely or until after a job offer has been made.

Another step, which is crucial, is for an employer to have comprehensive, company policies that clearly state what is expected of employees, and what kinds of behavior will not be tolerated. An example would be a zero-tolerance violence policy. Ideally, the policies should be included in an employee handbook, and employees would sign an acknowledgement stating they received and read the employee handbook. Employees should be given feedback when they are and are not properly following procedures.

Finally, employers must promptly address problems when they arise. This should be done through proper investigation of allegations and disciplinary action when appropriate.

Although independent contractors don’t typically expose an employer to liability, it is important that workers are classified properly. Erroneous classification can result in employer liability for uncollected tax, back pay and issues with employee benefit plans.

HYPOTHETICAL SITUATIONS
An employer provides an employee with a company car for an overnight trip to visit a client. After arriving, the employee drives to a shopping mall near the hotel. While returning to the hotel, he crashes into another vehicle injuring the driver.

An ex-employee of an electrical service company shows up at a customer’s home. Unaware that he is no longer with the company, she lets him in relying on his representation that he was there at the company’s direction. The ex-employee physically attacks her.

So, which of the two employers is likely to face legal liability? Potentially, they both can. The first case may hinge on the determination by the jury or judge on whether the trip to the shopping mall constituted a detour or a frolic.

As for the second case, the Pennsylvania Superior Court noted in Coath v. Jones that “an employer may be negligent if he knew or should have known that his employee had a propensity for violence and such employment might create a situation where the violence would harm a third person.” Regarding the question if the negligence ceases when the employee is discharged, the Court opined that “where the employer has created a special relationship whereby his customers admit his employee into their homes then the employer may be required to give notice or warning to the customer that the employee is no longer employed”.

Employer liability cases can be very complex, requiring the knowledge of an experienced attorney. To speak with one of HKQ Law’s employment attorneys, call (800) 760-1529.