Worker's actions can haunt boss
Published 07/1/05

A boss may have to pay for her employees' mistakes. Under the legal doctrine of respondeat superior and under principal and agency law, an employer may be held liable for the negligent or intentional actions of her employees if the actions are committed by the employee within the scope of his employment. This legal doctrine attempts to allocate the risk to business enterprises for the accidents and damages which are a foreseeable result of the employee's employment.

An employee's act is within the scope of his employment if it is incidental to the employer's business and is done to further the employer's interest. The employer may also be responsible for the employee's actions if the employee was trying to serve the employer's business to some extent even if the primary motive of the employee's action was to benefit himself or another.

For example, companies may often have employees use their own vehicles to handle company business. If the employee, while driving on company business, negligently hits and injures a pedestrian, the employer is vicariously liable for the employee's negligence. The fact that the employer did not expect or encourage her employee to drive negligently is irrelevant.

In this case, the employee is acting as the agent of the employer. The driver is also directly liable to the injured person for his negligence but as a practical matter, the injured person, if intent on pursuing an action for damages, will more than likely pursue it against both the employee and the employer to enhance his chances of financial recovery.

Many employers have a general commercial automobile policy or other insurance which specifically covers the employee's actions. An employee's personal automobile policy may have a business purpose exclusion which excludes coverage when the vehicle is being used for a business purpose. The employer must be aware of this risk and make a business decision, after meeting with their insurance agent, as to what insurance is critical for their business and what insurance would be prudent.

In some cases, an employee's willful or malicious act may also be held to be legally within the scope of employment and subject the employer to liability. For example, if a salesperson knows that a competitor has a contract with an (otherwise) potential customer and the salesperson then convinces that potential customer to breach its contract with the competitor and go with your company, your employee and your company could both be sued by the competitor for wrongful interference with a contractual relations. Under those circumstances, it would be highly unlikely that there would be any insurance coverage available for either the costs of the defense of the claim or payment of any damages.

The foregoing issues illustrate some of many reasons why employers must be diligent in screening employment applicants, training employees on safety procedures and monitoring the employee's actions.

J. Daniel Marr is a director and shareholder at Hamblett & Kerrigan, P.A. His legal practice includes counseling businesses and business persons on a variety of legal issues, including employment, and advocating on their behalf. You can reach Attorney Marr by e-mail at: dmarr@hamker.com

This information is general information and may not reflect the most current legal developments, verdicts or settlements. The information provided should not be relied upon as an indication of the actual state of the law or of future developments. The information contained on the Hamblett & Kerrigan website is for informational purposes only and does not constitute legal advice. If the information referenced may be of legal importance to you, you should consult with an attorney to provide you with legal guidance and opinion as the the effect of the current law upon your situation.