When Employers Can Be Held Vicariously Liable for Criminal Acts of Employees

As an employer you must be concerned with how your employees behave in the workplace. Their actions when they work for you reflect the company and its values.

Of course this can lead to difficult situations. When an employee makes a false statement on behalf of the company, is the employer liable for this statement or the employee. The customer will certainly want satisfaction if they have been misinformed.

The law is on their side, this case study regarding a toy dart set shows how much it can cost a firm when a product is defective.

It’s not just the products that you need to be considering. The data you collect must adhere to strict guidelines or you can get into hot water.

Of course, as any Orange County DUI Lawyer will tell you this is a complex area of the law.

What Is A Criminal Act?

Anything which is against the law in the state you live is a criminal act, whether its theft, assault or even murder.

These acts are still criminal when performed by an employee on behalf of an employer. But, the question is when the employer is liable for the behavior of their employees?

Establishing The Link

The key to understanding when you will be liable as an employer is in deciding whether the conduct of an employee is sufficiently connected to the conduct which is authorized by an employer.

A good way of understanding this is to consider an employee who removes funds from a customer’s account for their own purposes.

If the employee must remove funds from these accounts as a legitimate part of their job then the emphasis will be on the employer to ensure there are adequate protection methods in place. This should stop any employee from being able to withdraw funds for themselves.

If these measures are not in place then the courts will find the employer liable for the actions of their employee.

Avoiding The Issue Of Liability

If a criminal act occurs and it is similar to the way in which an employee is meant to behave, such as in the above case, then you can be held liable.

It is therefore important to ensue you have these procedures in place:

• An authorized policy. This should define exactly what behavior is acceptable and required and that which is not. The policy should be included in the employment contract, especially if the employee is likely to be in a position to commit fraud. You must be able to prove the employee received the policy.
• If the position can be defined as needing high levels of trust and confidence it can be a good idea to have criminal reference check done before you employee them.
• Where there is the possibility of abusing the system then it’s important to put safeguards in place and ensure that these are checked regularly.
• You can and should look at insurance to cover you and your business against an incident.

Providing you have taken every reasonable step to protect your clients it is unlikely that you will be liable for the actions of your employees. But it is always worth checking with a professional.