Vicarious Liability

My employee caused damage, can my business be held liable?

Did you know that an as employer you can be liable for the actions of your employees? The principle that an employer can be held liable for actions of its employees is called vicarious liability. Vicarious liability is an implied term in all employment contracts. Essentially, it means if an employee causes harm to a person or property during the course of his or her job duties, the employer can be found to be liable for the actions of that employee. Vicarious liability applies whether or not such actions were directly authorized by the employer where there is a close connection between the authorized acts of an employee and the harm suffered. It can apply even where an employee has adopted an unauthorized or incorrect method of completing an authorized task. Employers, including non-profit corporations, have been found to be vicariously liable for:

  • discriminatory actions of employees;
  • vehicular and other accidents caused while an employee is on the job (even where an employee has been found to have made a detour while driving);
  • assault and battery committed by employees;
  • theft and fraud committed by employees; and
  • sexual abuse and other types of workplace harassment perpetrated by employees (particularly where the employer is found to have known about the abuse or harassment and done nothing to curb the behaviour).

Typically employer liability is confined to actions conducted by employees during the course of employment. However, the courts have interpreted the phrase “during the course of employment” quite broadly to include activities that fairly and reasonably may be said to be incidental to the employment or logically connected to it. In some circumstances, liability has extended to off-duty conduct of employees including business trips authorized by the employer.

The reasoning behind the principle of vicarious liability is two-fold:

  •  it increases the likelihood of providing a harmed party an adequate remedy because businesses generally have a greater ability to pay than individual employees; and
  • it operates to deter businesses and their employees from acting negligently and ensure that the businesses standing to profit from the activities of their employees bear the risk.

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If you would like information on how to help your business mitigate the risk of vicarious liability, please do not hesitate to Contact us to discuss your options.