The Integrity News
"objective risk management news"
Vol. XV No. 6
September / October, 2006
Knowing what your company can
be vicariously liable for is crucial
for any C-level executive (or HR
professional). The chances for
vicarious liability can then be
minimized by taking various steps.
"While C-level executives ( CEO, CFO, COO, ... )
focus on complying with the heightened corporate
governance requirements imposed by the Sarbanes-
Oxley Act of 2002, they must not lose sight of
another zone of responsibility: vicarious liability for
employees' negligence." This is true for executives
of both public and privately-held companies.
"Vicarious (suffered by one person as a substitute for
another) liability is derived from the Latin 'let the
master answer'." What it means is: "the boss is on
"Under this doctrine, an employer will be liable for
the torts (wrongful acts) of its employees to the
extent that an employee's tortious conduct is
committed within the course and scope of his or her
"In this era of telecommuting and flex-time work
arrangements, the lines can blur regarding when an
employee is acting in the course and scope of his
or her employment."
WHAT THIS MEANS is that "plaintiffs suing on
a theory of vicarious liability will name the company
as a defendant, along with the employee who
committed the act in question."
Vicarious liability is different from negligent hiring.
For example, in a case where an employee was
driving on company business, the company may
find itself not only being accused of negligent hiring,
training, and supervision of the employee; but also
vicariously liable for the employee's actions.
"Determining whether an employee's actions are
within the course and scope of employment is
generally the starting point. Bear in mind that
courts have construed 'course and scope' issues
fairly broadly in the past, and in some cases
actions may be considered to be within the scope
of employment even where expressly contrary to
company policy, or even consciously criminal."
"An employer won't be liable for the actions of
independent contractors. However, they have to
be true independent contractors, where the
employer has no right to control and determine
the details of the worker's performance."
"Whether an employee will be deemed to be
acting 'within the course and scope' of his or her
job usually revolves three factors: (1) Was the
act within that worker's general authority ? (2)
Was the action being taken in the furtherance
of the company's business ? (3) Was the action
taken for the accomplishment of the purpose
for which the employee was hired ?"
"Knowing what the company can be vicariously
liable for is crucial for any C-level executive (or
HR professional). The chances for vicarious
liability can then be minimized by taking various
"These steps include carefully selecting and training
managers and supervisors, then clearly delineating
their scope of authority; adopting written company
policies regarding employee behavior while
conducting business outside of the workplace,
including the use of company vehicles; promptly
investigating allegations of alleged improper
conduct; and reviewing the company's insurance
This topic is something that you should discuss
with your legal and insurance professionals. If
you would like to discuss our experiences with
these employment issues feel free to call
The Integrity Center, Inc.
at (972) 484-6140.
Helping you with your Risk Management and HR Automation is what we do.