Vicarious liability can add new meaning to the term special relationship and cause the accused party to feel anything but special. These special relationships can exist between husbands and wives, and parents and children. In a business setting, vicarious liability typically occurs within the construct of an employer-employee relationship.

The legal theory supporting vicarious liability is that the employer is responsible for the actions of employees who are carrying out their assigned duties—and as always, the court will not accept ignorance as an excuse. The employer is also responsible for carrying out background checks. Examples include a security guard who exerts excessive force while policing a facility, a parking attendant who injures a customer while driving at an unsafe speed and a warehouse worker who injures a fellow employee while recklessly using equipment on which he hasn’t been properly trained.

Vicarious liability can occur whether an employee is operating a backhoe or installing malicious computer code. The fact that it can present in so many different ways adds to the challenge of guarding against it. Vicarious liability can also arise when an employee carries out his regular duties on behalf of his employer in an unlawful manner. Some other examples of vicarious liability at the workplace or at a worksite:
♦ While on his way to meet with a client prospect, a sales representative cheats a yellow traffic light and collides with another car in an intersection. Because his employer had not been pulling MVRs, he had not realized the sales representative had a high frequency of points. He also had a DWI. The employer learned his lesson, but it was too late to avoid charges of vicarious liability.
♦ Due to an increased seasonal workload, a company specializing in holiday gifts engages a temporary worker. Because the company did not run a background check, it was unaware this worker had a history of identity theft. While using the company’s computer, the temporary worker steals additional identities.
♦ An employee of a tree removal service has a known history of substance abuse. Because it is the busy fall season, he remains on the work roster. While under the influence, he makes the wrong cut and a tree limb falls on the roof of a parked car. Meanwhile, someone had been texting while sitting in that car.
Field Waldo Insurance specializes in developing insurance programs for physical security companies. These companies are especially vulnerable to vicarious liability when a guard is held liable for assault or battery while carrying out his duties on the job. This vulnerability becomes pronounced when the guard agency chooses to overlook the fact that the officer has a history of physical abuse. Physical security agencies are also vulnerable when a guard uses a patrol car on agency business, and the employer knows or should know that the guard intends or is likely to operate the vehicle in a manner that creates an unreasonable risk of harm. (Hot dogs should be kept on a bun, and out of company vehicles.)

It is important for a company to clearly define each employee’s approved areas of responsibility to help anticipate incidents of vicarious liability. These could include authorization to access confidential client information, authorization to undertake certain dangerous activities and authorization to drive a vehicle while on company business. A properly designed framework will ensure flexibility for employees who are getting the job done without outlining parameters that are too broad. Employers can anticipate instances of vicarious liability through rigorous thought regarding potential consequences of company representatives’ actions, clear communications to staff and subcontractors regarding their scope of work, careful background screening and proper insurance coverage.

Submitted by John Forsyth,Producer for Commercial Lines Insurance
Source: Marc Katz.