Starting And Managing Your Business101: Vicarious Liability: When Is An Employer Responsible For Acts Of The Employee?

    By: Richard E.Korb[1] In many personal injury and criminal cases, the violators are often not the only parties responsible for wrongdoing. For example, if an adult purchases alcohol or cigarettes for a minor, the adult is almost as responsible for underage drinking or drug usage as the minor. Under vicarious liability or respondent superior, if an employee commits a wrongful act, the employer(s) may be held responsible for the employee’s conduct.

The most basic definition of vicarious liability is: “An employer is vicariously liable for the acts of his or her employee when the acts cause injuries to a third party, provided that such acts were committed during the course of and within the scope of employment.” Many courts determine whenever an action makes an employer vicariously liable by deciding whenever the employee who committed the wrongful act is engaging in a detour or a frolic.

A detour occurs when an employee engages in a minor departure of duties, sometimes for personal gain and sometimes for the employer’s benefit. For example, if the employee is to deliver a product to a customer, but stops for gas, takes a short lunch break and uses the restroom, then the employee is only taking a detour. A frolic, however, occurs when an employee makes a major departure from duties, typically for personal gain. The employee who was suppose to make a delivery to a customer would be engaging in frolic if the employee decided to go see a movie instead. The distinction might sound trivial, but is important because it can help determine whenever or not the employer should be liable if a wrongful act occurs.

In general, a judge would be less likely to believe that an employer is liable if the employee is engaging in a frolic. An employee on a detour, however, is still considered a representative of his or her company and thus vicarious liability may still be pursued. This is especially true if an employee uses wrongful means to fulfill an otherwise legal action. For example, in Vasey v. Surrey Free Inns (1996), the owners were liable for the assault that the manager inflicted on the plaintiff. Even though the plaintiff had damaged the inn’s property and needed to be evicted, the manager still had no right to assault the guest. Since the manager was on duty and representing the inn at the time of the assault, there was no doubt that Surrey Free Inns was vicariously liable.

It seems reasonable to assume, based on the information given thus far, that an employee acting on his or her own outside the course and scope of employment could not make his or her employer’s liable. This, however, is not always true. An employer may still be responsible for their employee’s actions if the employer knowingly aided or caused the actions to occur. In Diaz v. Carcamo (2011), a California trucking company hired an illegal immigrant with many auto accidents on record. The company’s new employee promptly caused a multiple vehicle injury accident. The company was forced to admit in a California superior court that they were liable for the driver’s accident as they should have checked his background before hiring the man.

Even more notable though, are the American Supreme Court cases Burlington Industries v. Ellerth (1998) and Faragher v. City of Boca Raton (1998). In a 7-2 decision, the justices ruled in the joint cases that employers were vicariously liable for sexual harassment if there was evidence of tangible adverse effects, firing, denial of promotion, pay or benefits package cut, on an employee complaining about sexual harassment. The Court reasoned that employers were liable because the employers had created an environment in which supervisor’s could use their power to harass lower employees.

Finally, an employer may still be liable for an employee’s wrongful conduct outside the court and scope of employment if the conduct was regulated under contract. In the widely publicized case Cimpean v Peyton (2008), the NBA team, Milwaukee Bucks, were held liable when three of their players were found to have assaulted a couple. The entire team was liable because the player’s contracts had specifically stated that the players were to be on their best behavior both inside and outside the basketball court. The judge held that, based on the contract, the Milwaukee Bucks were responsible for what the players’ had done.

Since arguments about scope of employment are subject to many exceptions, some employers might wish to use another defense. An employer is only responsible for the conduct of employees, as employers can direct both what employees do and how employees should do it. An independent contractor, however, is often considered outside the scope of an employer’s direct control. Therefore, independent contractor’s behavior may not bear the same consequences for an employer as an employee’s behavior. This defense was successfully used in the Pennsylvania case Valles v. Albert Einstein Medical Center (2000). In Valles, a doctor was accused of using a medical procedure without the patient’s informed consent. The operation went badly and the patient passed away. The Court for the case eventually found that “it is the surgeon and not the hospital who has the education, training and experience necessary to advise each patient of [the] risks associated with the proposed surgery… For these reasons we hold, as a matter of law, that a hospital cannot be held vicariously liable for the failure of its physicians to obtain a patient’s informed consent.” In other words, the Court found that the doctor was an independent contractor for the hospital and thus the hospital could not be held liable.

In conclusion, vicarious liability in business law refers to the responsibility an employer may have for an employee’s wrongful conduct during the course and scope of the employee’s employment. The most common defense for an employer being held vicariously liable is to demonstrate that the employee in question committed the wrongful acts outside of the course, scope and control of the employer, either outside normal work hours or during a frolic on the part of the employee. However, this defense often has many exceptions. Another useful argument against a vicarious liability claim would be to prove that the worker was an independent contractor, although there are many court tests to separate employees from independent contractors.

If you have questions or need additional information about liability, please contact Berkeley-Oakland-Walnut Creek business attorney Richard Korb at (510) 524-0903 for a free consultation.