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What Is Vicarious Liability and How Does It Affect Your Business?

As a small to medium business expands and starts to hire new employees, it is important to know your risks as an employer. In certain circumstances your business can be liable for the harmful actions of your employees. This is called “Vicarious Liability.” There are important things to remember with this legal doctrine. Probably the best way to illustrate this principle is through a hypothetical.

You started a business called “Burnside Hotdogs.” Over the past several years business has been very good. As a result you decide to open four more locations that continue to bring in substantial revenue. Naturally, when you open the new locations you hire extra staff. For each additional branch you hire a manager, a cook, a busboy, and a cashier. In addition since the locations are in a college neighborhood you decide to stay open late to cater to the kids coming back home for a night of partying. One day, an intoxicated college kid enters your establishment and starts to disrupt your business. The manager directs the busboy (who happens to be the Massachusetts weight lifting champion) to “Escort the gentlemen off of the premises.” The busboy takes the kid and not-so-gently pushes him out the door. With the momentum the door and the kid hits a girl on her way back home and breaks her nose.

This is a horrible scenario, but it is absolutely feasible. Now let us examine the legal risks of the parties involved. It is very likely that the girl in the above scenario will attempt to get compensation from the wealthiest source. The busboy might be directly responsible but he is only a busboy and might not have a lot of money. The same principle applies to the manager of the hotdog store. Even though she is in a little better position than the busboy, the restaurant and you as the owner are going to be named in the lawsuit.

The ability for the girl to sue the employer for the actions of the employee falls under the principle of “Vicarious Liability.” As an employer you directly have the power to control the employee. With this control comes the means to prevent the harmful action. However, the law recognizes that an employee has his own will and might act in a manner that is not consistent with the employment.

The legal risk of the employer rests on the actions of the employee, acting in his capacity as allowed by the employer. In short, the employee acts in the scope of his employment. It is possible for the employer not to be responsible for the actions of his employee when the employee does not act in furtherance of the employer’s interest. The law calls the employee’s actions a “frolic.”

To come full circle with the hypothetical, let us look at the legal risks that the busboy, manager and you as the owner would have in such a situation. First, the busboy can be sued because he did the pushing and is the first link in the chain of harm. His actions directly created the harm caused. Next, let us look at the manager who gave the direction to remove the drunken kid from the premises. It was her order that made the busboy act. Moreover he is a weightlifting champion and it could be easily foreseeable that he might use a little bit of excess force. The law will view the busboy as a tool for the managers will. Finally, you as an employer might also be liable because you are the one that appointed the manager and the manager is acting as your representative. By assigning a representative you are assuming responsibility for the actions of that manager. The manager is acting on your behalf, they are perpetuating your interest and you are benefiting from this representation.

As you can see this is a very complicated issue because you can be held liable for a course of action that other people have initiated. As a business owner it is possible to have to pay for the harmful actions of your employees. However there are remedies that a good lawyer can institute to shield you from such liability and in case of legal action can minimize the fallout from a series of unfortunate events. If you are ever in need of liability defense or liability prevention, The Jacobs Law, LLC can help you with any questions or concerns.

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