Vicarious Liability: An Employer's Liability for Employee Actions

Under vicarious liability, employers can be held liable for accidents caused by employee negligence. Vicarious liability can depend on the type of accident and whether the employee was acting in the course of employment. Many employers underestimate how an employee’s negligence can cost in personal injury claims, legal costs, and reputational harm.

This article provides an overview of vicarious liability and how it affects employers. To understand how to protect your business against vicarious liability risks in your state, talk to a local employment law attorney.

Understanding Vicarious Liability

Liability is legal fault. If you cause a car accident, you’re liable for damages to the injury victim. Vicarious liability means someone else is legally responsible, even if they didn’t directly cause the accident.

Vicarious liability cases often involve accidents caused by employee negligence during the scope of employment. An employee is acting within the scope of employment when their conduct:

• Is of the kind they are employed to perform as part of their job
• Occurs within the authorized time and space of employment
• Serves the employer

For example, a car parts company has a driver who delivers parts to mechanics across the city. While on delivery, the driver runs a stop sign and causes an accident. The employer is likely liable for the negligent acts of the driver.

Vicarious liability claims are complex and involve fact-specific factors. Your role as an employer for an accident involving an employee depends on your state’s employment laws. Talk to an employment attorney for legal advice about vicarious liability claims.

Legal Principles of Employer Liability

Vicarious liability relates to the legal doctrine of respondeat superior, which is Latin for “the master must answer.” This is also known as the master-servant rule. When employees act on behalf of their employer, the employer is responsible for the wrongful actions of its employees.

There are several reasons why employers are responsible for the negligence of their employees. When an employee causes an accident and someone suffers serious harm, employers are generally in a better financial position to cover damages. Employers usually have liability insurance coverage to cover the accident.

Employers are also responsible for hiring employees. The employer is in a position to evaluate an applicant’s skills, qualities, and possible risks. The employer can do reference and background checks to evaluate an employee’s risks. If the employer hires a reckless or dangerous employee, the employer is liable for damage caused by the actions of their employee.

Apparent Authority for Medical Employers

Another legal risk for some employers involves the legal theory of apparent authority. Many hospitals have independent doctors and medical workers who use their facilities for procedures.

Even if the medical professionals are independent contractors, the hospital can be liable if a reasonable person would believe the hospital employed the doctor. Hospital employers should take steps to clarify the independence of medical providers.

Vicarious Liability Implications for Businesses

Employers should consider the risk of liability for any acts or omissions of an employee while acting in the course of their employment. Asking an employee to do a work task that is not in their general duties can expose the employer to possible liability.

Employers should consider liability coverage and whether any employee actions fall outside coverage.

Managing Risks of Employee Conduct

Employers can be liable for negligent hiring, supervision, and retention. When workers are careless, employers must act to avoid possible liability.

For example, an employer hires a driver with multiple DUIs on their record. The driver shows up to work smelling of alcohol. The driver assures the employer they are not under the influence of alcohol and can drive safely. If the driver causes an accident while impaired, the injury victim can sue the employer for negligent hiring and retention.

Employer Liability Insurance Coverage

There are different types of employment insurance policies, including general liability insurance and employment practices liability insurance (EPLI). Insurance coverage should include any possible job duties and activities, even if they are not in the daily course of business.

For example, a dental office has insurance coverage for employee acts or omissions at the office location. However, once a year, the dental office has a worker training session at an off-site location. Even though it’s only once a year, insurance should cover job responsibilities outside the daily activities.

Defenses to Vicarious Liability Claims

There are several possible legal defenses to vicarious liability claims, including:

• Assumption of the risk
• Contributory negligence of the alleged victim
• Actions outside the scope of their employment
• Action by independent contractors rather than employees

Scope of Employment Defenses

Many claims depend on whether the employee was acting within the scope of the employment when causing the accident. An employee acting for their own personal reasons and not the employer’s is not within the scope of employment.

One example is known as the frolic and detour defense. Say a delivery driver drops off the goods to a client. Though the employer expects them to return to work, the driver decides to go home and rest for a bit. If the driver gets into an accident while detouring from their delivery route, the employer has a defense to a vicarious liability claim.

Likewise, employees are generally not considered to be working on their way to and from the job.

Vicarious Liability for Independent Contractors

Generally, employers are not liable for the negligence of independent contractors. That being said, some employers wrongly classify employees as independent contractors.

Determining whether a worker is an employee or independent contractor depends on several factors. Even if an employer calls someone an independent contractor, they can liable if they have an employer-employee relationship in fact.

Best Practices for Employers

The following are some tips for employers to avoid potential problems with vicarious liability claims:

• Ensure business insurance policies cover any worker activities or locations that could fall within the scope of employment
• Audit worker classifications to make sure there are no employees miscategorized as independent contractors
• Keep employee training, handbooks, and workplace policies consistent with employee job duties and job descriptions
• Follow strong hiring, training, and supervision policies to avoid employing risky workers
• Contact an employment law attorney to make sure you are doing what you can to reduce the risk of vicarious liability claims

Legal Help With Liability Claims for an Employee’s Accident

An employment lawyer understands vicarious liability and can provide up-to-date legal advice. An attorney can review your insurance coverage to close any gaps in potential liability. Your attorney can also review your hiring, supervision, and disciplinary procedures to make sure you follow best practices.

If you do face a vicarious liability claim for an employee’s negligence, contact a local employment law attorney for help.