One aspect of business ownership that is sometimes forgotten when a small business owner goes into business for himself is that the business can become legally responsible for some of the actions of his employees. This liability can potentially cost the business a lot of money later on depending on the employee’s actions, and therefore, the business should take steps to protect itself as much as possible beforehand.
Under the doctrine of respondeat superior, an employer becomes vicariously liable for the actions of its employees that are done in the course of the employee’s employment. It is not always possible to determine exactly which actions a court can later determine were done in the course of the employment. However, the employer can expect that if the employee was acting within his or her prescribed duties, or running an errand or activity that benefited the employer, chances are that this would be considered in the course of the employee’s employment.
This somewhat broad liability applies to a wide range of employee actions, from car accidents or other personal injuries to workplace issues such as harassment. For example, if a drunken employee is driving a company car and causes an accident, the employer may be found vicariously liable if the employee is found to be in the course of his or her employment. If the employee went drinking with friends, driving a company car long after work, and decided to drive home afterwards, the employer is not likely to be found liable. However, if the drunken employee is leaving a function he or she was required to attend as part of his or her work duties, and drove the company car home afterwards the employer is likely to be liable.
While the employer cannot always rely on its own internal policy to curb employee behavior or liability for the consequences of that behavior, the employer should still ensure that in some cases, there are enough procedures in place to stop some employee misconduct and limit liability. For example, with workplace harassment, an employer can institute procedures that deal with the reporting and resolution of claims of workplace harassment, especially by upper management.
Additionally, employers should be careful of the employees they hire, and what company property is entrusted to them. In addition to an employee’s actions being imputed to the employer under the doctrine of respondeat superior, there are other legal bases under which a person injured by an employee can seek employer compensation, for example negligent hiring.
The small business employer who is afraid that his or her business would go under if faced with a lawsuit based on the actions of an employee can seek insurance to cover the costs. While this is an added cost on a regular basis, it could prove very useful down the road.
Let Us Help Your Business
If you are a small business owner dealing with this issue or seeking advice on this and other employment related issues, contact the experienced North Miami business attorney from Charlip Law Group, L.C. for a consultation.