Company Liability for Employee Acts

As a startup or small business owner hiring your first employees, you may be wondering what the extent of your liability for their actions will be. Like most things in law, the answer is “it depends”. To start, employers are vicariously liable for their employees’ actions under the doctrine of respondeat superior.

More specifically, employees are generally considered agents for their employers; however, that agency only extends to the scope of their employment. Therefore, when asking if an employee’s actions or omissions can bring liability upon the employer, it is necessary to ask whether the employee’s action or omission was in the course of employment. Generally, any act or omission that occurs during the employee’s execution of work-related tasks or assignments, or anything else that might fall within the natural scope of the employee’s position.

Two other important concepts to consider are “detour” and “frolic”. A detour is only a minor deviation by an employee from explicit instructions or job responsibilities; conversely, a frolic occurs when the employee deviates so far from performing his or her instructions or responsibilities that any action or omission that occurs falls outside of the scope of employment.

For example, if a startup hires a sales manager who visits prospective clients and while driving to a client meeting the manager stops for gas, if the manager hits a pedestrian at the station the gas stop may well be considered a “detour” (since it was a minor deviation in the course of going to a client meeting) for which the employer is liable. On the other hand, if the manager uses his lunch to run a series of personal errands and in the midst of that hits a pedestrian, it may likely be considered a “frolic” since running personal errands (even in the middle of the work day) is not within the scope of employment.

However, an employer can sometimes be liable for frolics under the theory of negligent hiring. As another example, let’s say an employee assaults someone in the office. Although the assault is certainly not within the scope of employment and can be considered a frolic, if a background check would have revealed that the employee has previously been convicted of assault, the employer might be held liable for negligent hiring for hiring someone with a violent disposition without a proper background check.

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