Employer Beware: You Can Be Held Liable for
Your Employees'
Misconduct
By: DOUGLAS A. MILLEN, associate at Much Shelist Freed Denenberg Ament Bell
& Rubenstein, P. C.,
Chicago
| Illinois employers may be held liable for their employees' actions under
one (or more) of three separate legal theories: respondeat superior, negligent
entrustment, and negligent hiring. A working knowledge of the issues driving
these theories will enable you to minimize your business' exposure to liability.
Respondeat Superior Under this doctrine, an employer may be held vicariously liable for the tortious conduct of an employee who was acting within the scope of his or her employment. The key issue here is what conduct falls within the "scope" of employment. An employee's conduct is covered if it is of the kind he or she is employed to perform, occurs substantially within the authorized time and space limits of the employment, and is actuated, at least in part, by a purpose to serve the employer. For example, say you run a dairy that hires drivers to deliver milk in Chicago. As he pulls up to a curb to make a delivery, Driver A throws open the door of the truck without looking out to make sure no one is approaching. An unfortunate cyclist is "clothes-lined" by the truck door and suffers physical injury. Because Driver A was operating within the scope of his employment, your dairy may well be found liable for his negligence. Note that there are instances in which an employer can be held liable under a respondeat superior theory even though the employee was acting outside the scope of employment. In such cases, liability is based on the employer's approval, or ratification, of the employee's injurious conduct. For an example, let's turn back to your dairy which, as you recall, delivers milk in Chicago. You are aware that Driver B likes to take her delivery truck to the casino in Gary, Indiana after work on occasion. You have no problem with that, and even join her once in a while. But if Driver B is involved in a traffic accident after work, in Gary, you may be found vicariously liable to the other driver even though the conduct giving rise to the suit was well beyond the scope of Driver B's employment. There are two lessons to be learned here: 1) Sharply define the scope of your employees' duties, clearly delineating proper and improper methods of serving your business' needs; and 2) tolerate no deviation from these parameters. Negligent Entrustment Under this doctrine, an employer may be held liable for physical harm which ensues when it entrusts a chattel (personal property, as opposed to real property), either directly or through a third person, to an employee who the employer knew or had reason to know was incompetent and posed a foreseeable risk of harm to others. An employer will most commonly be hit with a negligent entrustment action when an employee gets into an accident while driving a business-owned automobile. To prevail, the injured party must show that the employer entrusted a company vehicle to a known unfit driver and that the accident resulted from the employee's incompetence. Whether the employee involved was acting within the scope of employment is not a concern in a negligent entrustment case. The employer's negligent act of entrustment, not the scope of employment, forms the basis of the tort. Thus, in Illinois an employer can be found liable under this theory even if the employee's conduct falls outside the scope of employment. Accordingly, employers should carefully assess the driving record and character of an employee before handing him or her the keys to the company car. Negligent Hiring Under this theory, an employer may be held liable for the negligent or intentional tort of an employee on the premise that it breached a duty to use due care in selecting and retaining only safe and competent employees. In addition, Illinois law holds that an employer may be found liable for negligently hiring an independent contractor. Unlike respondeat superior (and similar to negligent entrustment), negligent hiring is not a true form of vicarious liability, that is, liability does not stem solely from the conduct of another. While the employee's conduct is, of course, quite material, the focus of a negligent hiring action is the independent act of negligence committed by the employer, i.e., the employer's failure to use due care when hiring the employee. Thus, whether the employee was acting within the scope of employment is not directly relevant and an employer may be held liable for negligent hiring even if the employee's wrongful conduct occurred outside the scope of his or her employment. While there are no fail-safe methods for ensuring that you hire only fit employees, there are ways to greatly reduce your business' exposure to liability for the actions of its employees and contractors: 1) Regardless of the way your company categorizes those who serve its interests, be aware of the legal definitions of "employees" and independent contractors" and the distinctions the law makes between these two types of workers; 2) require every prospective employee to fill out an employment application and attend an employment interview; 3) maintain open channels of communication between company departments and among employees; 4) maintain accurate records of all inquiries into an employee's fitness and character; and 5) carefully assess the experience and references of contractors before hiring them. |
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DOUGLAS A. MILLEN is an associate at Much Shelist Freed Denenberg Ament Bell & Rubenstein, P. C. with offices at 200 N. LaSalle St. in Chicago. He may be reached at 312-346-3100 or by e-mail at dmillen@muchlaw.com
The information offered here is not intended as legal advice or opinion applicable in specific circumstances. You are urged to consult an attorney concerning your particular situation. Under professional rules, this article may be regarded as advertising material.
Copyright © 1998 - Much Shelist Freed Denenberg Ament Bell & Rubenstein, P.C. Reprinted with permission. All Rights Reserved
