Vicarious Liability

What is vicarious liability?

Vicarious liability is when one party is held responsible for the actions, words, and deeds of another party under their supervision. The supervisory party does not commit the actual wrongdoing, but they are held accountable for the supervisee’s harmful or negligent actions when committed within the scope of their relationship to each other.

Examples of relationships where vicarious liability may apply include:

• A parent/guardian and his or her child(ren)
• A car owner and car driver
• An employer and employee

Understanding vicarious liability is important for protecting your employees and business. If found to be vicariously liable for an employee’s actions, your company could suffer significant financial and reputational losses.

Vicarious liability as a legal concept comes with a lot of gray area, particularly when defining what constitutes harm and a person’s scope of employment.

How does vicarious liability work?

Employers are held liable for negligent or harmful actions committed by their employees in any instance where the employees are operating within their scope of employment. This applies to both on-site and off-site occurrences. For example, if a delivery driver caused an accident while driving their assigned route, the delivery company could be vicariously liable for property damage or personal injuries resulting from the accident.

Note that negligent and harmful actions aren’t limited to physical acts: according to the U.S. Equal Employment Opportunity Commission (EEOC), “An employer is vicariously liable for a hostile work environment created by a supervisor. Under this standard, liability for the supervisor’s harassment is attributed to the employer.”

The employer is automatically liable if the supervisor took a tangible employment action as part of creating the hostile work environment. Examples of tangible employment actions include:

• Hiring, firing, or termination
• Demotion, promotion, or failure to promotion
• Job reassignment to a role with significantly different responsibilities
• Significant change in benefits
• Loss of pay
• Granting a pay raise

If a tangible employment action didn’t occur, the employer may not be vicariously liable, provided that they can definitively prove both of these criteria:

• The employer took reasonable and prompt steps to prevent, limit, and correct harassing behavior.
• The complaining employee failed to follow the employer’s established complaint procedure in a reasonable manner or timeframe.

Examples of vicarious liability

Vicarious liability arises from actions that cause physical or mental harm to a person or property, or acts of negligence. In both scenarios, the person committing the act is directly responsible for harm or negligence, and that person’s supervisory party is vicariously liable.

For instance, a company may be held vicariously liable for failing to implement effective anti-harassment policies and training if an employee is consistently bullied by their supervisor and lacks a formal or reasonable means to report the incident.

In addition to bullying, these actions and behaviors can also be grounds for vicarious liability:

• Harassment
• Discrimination
• Personal injuries
• Mental abuse
• Slander or libel
• Copyright infringement
• Property damage

One of the most well-known cases of vicarious liability is the Exxon Valdez oil spill, in which an oil tanker ran aground and spilled 11 million gallons of oil into the ocean. The tanker’s captain was guilty of operating the ship while intoxicated, but as the owner of the vessel, ExxonMobil was vicariously liable for the captain’s negligence, among other charges.

Vicarious liability exceptions and defenses

Not every instance of employee misconduct or negligence results in vicarious liability for the employer. A few common defenses are outlined below.

Independent contractor classification

Employers may argue that they can’t be vicariously liable for an independent contractor’s actions since they’re not full-time employees. While independent contractors often have more control over their work than the employer does, the employer is accountable for adhering to responsible hiring practices and “for any physical harm caused by any act committed by independent contractors pursuant to orders or directions negligently given by employers,” according to Cornell Law School’s Legal Information Institute.

“Frolic and detour”

The “frolic and detour” defense declares that an employee’s negligent or harmful act occurred outside the defined terms of the employer-employee relationship. The employer must be able to demonstrate that the employee’s action wasn’t related to the type of work they were hired to perform (ie, outside the scope of employment) and that the action served the employee’s — not the employer’s — own interests.

Unforeseeable actions

If employers can prove that they couldn’t foresee an employee’s intentional misconduct, they may not be considered vicariously liable for the actions. Again, the employer would likely need to prove that the act occurred outside the scope of employment.

How to avoid vicarious liability

Employers can protect their employees from physical and mental harm, and themselves from vicarious liability, by taking proactive measures.

Create an employee code of conduct. The code should clearly outline which actions and behaviors are permitted, which are prohibited, and what happens if rules and regulations aren’t followed. Have employees read and agree to the terms. Consulting with legal professionals can help ensure the company is complying with all current employment laws and regulations.

Implement appropriate training programs. Employees should receive training on discrimination, sexual harassment, workplace safety, and compliance upon hire, with periodic review sessions throughout their employment. Reference materials should be available to employees at all times, either in the workplace or accessible via an online portal.

Establish a clearly-defined complaint process. The information should be easily accessible and should include easy-to-understand guidance on proper filing procedures.

Take all complaints seriously. Dismissing even minor complaints as misunderstandings or overreactions without following the established protocols immediately weakens the employer’s credibility in a vicarious liability case.

Create and sustain a supportive work environment. Fear of workplace retaliation is a barrier to following established complaint procedures. Maintaining a positive work environment reduces fear of reprisals and assures employees that their concerns are taken seriously.