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Negligent Hiring/Retention and Vicarious Liability

Employers can be exposed to liability from various sources. One particular source is recognized under the theory of negligent hiring. As the name implies, negligent hiring involves imposing liability on the employer for “hiring and retaining employee(s) that the employer knew or should have known was likely to undertake conduct against third parties or other employees which could create legal liability.” The scope of liability for negligent hiring also includes failure to adequately train and supervise employees; meaning, an employer may face liability for the conduct of employees that is attributed to inadequate training and supervision of the employer. It comes as no surprise, the role of an employer comes with many risks, and many of which can impose legal liability to the employer. 

In order to prevail in a claim for negligent hiring and/or supervision, the plaintiff must show that the employer failed to exercise reasonable care in choosing or retaining an employee for the specific responsibilities that the employee was hired to perform. Reasonable care means the degree of care in the hiring that a reasonably careful and prudent employer would exercise in the same similar circumstances.

Negligence cannot be presumed just because the injury occurred. The plaintiff must prove that the employer had either actual or constructive notice of the employee’s incompetence. Actual notice means that prior to the alleged act of employee that resulted in injury to the plaintiff, the defendant-employer actually knew of employee’s incompetence. This may be established by way of constructive notice—which means that the defendant-employer, in the exercise of reasonable care, should have known of the employee’s incompetence prior to the alleged act of the employee that resulted in injury to the plaintiff.

An employer can attempt to avoid negligent hiring and retention claims by properly doing a background check, drug testing, checking employment and personal references, and by taking other appropriate measures, when possible, that would minimize the risk of hiring a potential employee not suitable for the position.

Similar to the theory of negligent hiring and retention is the theory of vicarious liability. Vicarious liability is the ability for an employer to be legally liable for the actions of an employee. This type of liability may be imposed through actions against other employees or third-parties.

Of particular importance, however, is holding an employer liable to a third-party for the acts of an employee. To hold an employer liable for the negligence of the employee, a plaintiff must establish the following: (1) the employee was negligent; (2) that the negligence of the employee was the proximate cause of the plaintiff’s injury; and (3) that the relationship between the employer and employee existed between them at the time and in respect to the very transaction out of which the injury arose. In this scenario, the plaintiff will have single tort action against two or more defendants as joint tortfeasors, or under the doctrine of respondeat superior.

The doctrine of respondeat superior generally allows an employer to be held vicariously liable for the tortious acts committed by an employee acting within the scope of the employee’s employment. Under the doctrine of respondeat superior, the plaintiff must establish that an employer-employee relationship existed between the wrongdoer (employee) and the person sought to be held liable (employer). It follows, it must also be shown that the employer-employee relationship existed at the time the employee engaged in the wrongful conduct and it was within the scope of the wrongdoer’s employment. Further, it was being performed in furtherance of the employer’s business. Proof of general employment alone, is not sufficient. This doctrine is premised on the notion of an employer’s duty to third-parties. Under such duty, it is equitable to hold the employer liable for actions committed by employees engaged in the work of the employer, and doing that which such person is employed or directed to do. As such, whether done negligently or maliciously, the employer is liable for not only what the employee does, but also for the ways and means employed by the employee in performing the action.

In limited situations, however, this form of liability may extend to the hiring of third-party independent contractors. Generally, employers are not liable for the actions of the independent contractors. However, some circumstances entitle a party to recover from an employer of an independent contractor. In such cases, the employer is again, liable for negligently hiring of a third-party. However, the plaintiff will need to establish the following elements: (1) the independent contractor acted negligently, (2) the independent contractor was incompetent at the time of hiring, as manifested by inherent unfitness or previous specifics acts of negligence, (3) the employer had notice, either actual or constructive, of this incompetence, and (4) the plaintiff’s injury was the proximate result of this incompetence. In a particular circumstance, although an employer-employee relationship does not exist, equity dictates that an employer should be liable for non-delegable duties.

When the independent contractor is engaging in a non-delegable duty, it would be unjust to permit employers to be shielded from liability.  This often arises in situations dealing with innkeepers (e.g., hotel owners or landlords). Under the non-delegable duty doctrine, innkeepers owe a duty to keep the premises in reasonably safe conditions and to warn guests of any hidden perils. Although innkeepers are not the insurer of personal safety, the duty owed to guests are non-delegable, and as such, liability cannot be avoided on grounds that their performance was entrusted to independent contractors. For example, depending on the evidence, innkeepers who employ a plumber to repair electric hot water heater could be liable for the death of a guest in an explosion of the heater by failing to use due care for safety of the guests by employing a plumber instead of an electrician. The innkeeper can also be liable simply for the plumber’s negligence. Page v. Sloan, 281 N.C. 697 (1972).

In cases not involving non-delegable duties, however, a party will unlikely be able to successfully recover against the employer of an independent contractor. As with any claim where the underlying theory is negligent, the question turns on whether there was a duty owed to the plaintiff. Since many companies hire independent contractors, especially carriers or salesmen, this may become a rather challenging inquiry. A 2005 case in North Carolina illustrates that a company is not always liable for the actions of an independent contractor they employed. In Little v. Omega Meats, the company hired a salesperson as an independent contractor to sell meat door-to-door. Unfortunately, the salesperson robbed and assaulted one of the homeowners in their home. The court ruled that, although the company employed the salesperson, the company did not have a duty to the homeowners because the robbery occurred at a place where the salesperson did not have a legal right to be—the salesperson broke into the home. Therefore, the salesperson did not have a legal right to be in the home, and further, the encounter with the homeowner and salesperson was not a result of the salesperson’s relationship with company. Although a party who employs an independent contractor has a continuing responsibility to ensure safety precautions are taken, the legal duty did not extend to the homeowners because the independent contractor was not “incompetent” or “unfit” at the time of hiring.

Employers can be exposed to liability in various ways, these are just a few. Whether you are a small to midsize company and you believe you may be exposed to liability for the conduct of an employee or independent contractor, or you are an individual who suffered injuries by an employee or independent contractor, the attorneys at Rosensteel Fleishman, PLLC have years of experience in this area. Contact us today for a free consultation.

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