Can an Employer Sue an Employee for Negligence?

What Is Employee Negligence?

Employers must balance tensions between prudent management of their business and the belief that employees have an implied covenant to take care of their employer’s business interests.
Employee negligence is the failure of an employee to act with due care, resulting in damage to the employer. This can occur when an employee fails to follow safety procedures, causing injury to a fellow employee. Or, it may be the misconduct of an employee that causes damage to the employer’s property or resulting in financial loss. An employee’s negligent conduct may result from a failure to follow directions, the failure to act reasonably or a compliance with a supervisor’s orders to intentionally cause harm to another employee. While employee negligence is not always actionable, the situation will depend on the circumstances under which the negligence occurred. Just because an employer’s employee has committed a negligent act , this does not mean that the employer can recover any damages. An employer’s claim may be barred by the "going and coming rule." Under the going and coming rule, the negligence of employees who get injured while commuting to or from work is ordinarily not compensable under workers’ compensation claims since injuries do not arise out of or during the course of employment. Another, common situation may arise where two co-workers work together in a joint venture, project or task. For example, one of the co-workers who physically inflicts injury to the other employee while doing his job may be protected by the exclusivity provision of the state workers’ compensation law, which might bar a lawsuit against him or her. However, in the case of malicious acts of assault or battery by one employee against another employee, the workers’ compensation law will not apply and the injured employee may sue the employer as well as the employee perpetrator.

When Can an Employer Sue an Employee?

Employers may have legal grounds to sue employees in limited circumstances. The law of negligence is the legal basis for a company to sue an employee for causing the company economic or reputational harm through negligent conduct, including negligence in the performance of their occupational duties and breaches of contractual duties.
A common ground for an employee to be liable for incidental, economic damages to the company is negligent misrepresentation. In such cases, it is generally alleged that the employee, while acting as a company’s agent and within the scope of his employment, made false representations to a third party and the third party detrimentally relied on those representations in making some decision that harmed the company.
A leading Delaware Chancery Court case against a management employee expresses the law in the following way: "Under Delaware law, the holder of a position in a corporation owes various statutory and common law fiduciary duties to the corporation. One such duty is the duty to refrain from disloyal conduct that harms the corporation."
Whether an employee acts disloyally is measured by whether he or she has acted contrary to the company’s interests, in the context of his or her employment, for the direct personal benefit of the employee. A common factual allegation supporting a company’s claim of disloyalty is alleging that the employee was secretly working for a competitor in violation of a non-compete provision of an employment contract.
Rarely will a company prevail against its own employee on a tortious interference claim for the wrongful termination of a business relationship, although not for lack of trying. A company may make out a case of tortious interference with its business relationships if the company can establish that an employee "intentionally interfered with the plaintiff’s reasonable expectations of economic advantage through wrongful means."

Employer or Employee?

Most people understand that if they are sued for a personal injury, and the basis of the claim is that they were negligent, the plaintiff will almost always have to prove not only negligence – that the defendant was careless or acted unreasonably under the circumstances – but also that the defendant was a cause of plaintiff’s injury. So, for example, a plaintiff cannot prove a case of negligence by merely showing that the defendant drove through a red light, i.e., that he was careless. The plaintiff must also show how the defendant’s violation of the law caused the plaintiff’s injury, i.e., the plaintiff must show that the defendant’s actions comparably contributed to the harm.
Having said that, liability can sometimes be spread among several parties. For example, if a driver faced with a sudden emergency veers off the road into a tree, which causes him to flip his car and injure a passenger, a jury may assign liability to the driver, to the owner of the parked car by the side of the road who left his door open, to the person walking dangerously close to the road without looking, or maybe even to the city whose controller failed to cut down the tree. Sometimes, liability for these injuries might even be spread among several of these defendants.
There are two concepts in the law that might apply to employers and employees: vicarious liability and joint liability. Vicarious liability refers to the concept that an employer should be responsible for the acts of its employee, even though the employer had nothing to do with, nor had any notice of, the actions of the employee that harmed the plaintiff. (As an aside, this concept has been permissibly broadened to hold parents responsible for the actions of their minor children who lived in their home, when the defendant can show that the parent "had the ability to prevent" the harm by proper discipline, for example.)
Vicarious liability seeks to impose liability on the employer for the wrongs of its employee because the employer has control over the employee. A plaintiff suing an employer based on a theory of vicarious liability would argue that the employee was acting in the course and scope of his employment when he committed the wrong.
The doctrine of vicarious liability would not usually apply when a job applicant is allegedly negligently hiring an employee. This is because at the time he was hired, the employer had no way to know – and therefore no way to control – the applicant’s actions. On the other hand, the employer might be said to be "jointly liable" with an employee who committed the alleged negligence if the employer knew of the employee’s prior wrongs, or if the employer "ratified" those prior wrongs, i.e., specifically authorized the employee to engage in conduct that it knew (or should have known) would lead to the wrong.

What Factors Go Into a Negligence Lawsuit?

A significant factor that goes into the decision of whether an employer can pursue or will be able to pursue a lawsuit against an employee is the level of negligence. A negligence claim must demonstrate that the person against whom the claim is being made had a duty of care, breached that duty, and the breach caused an injury that is compensable. The greater the level of negligence by the employee, the more likely it is that a claim could prevail. There are different forms of negligence that could constitute this and they are often referred to by their Latin terms: Negligent retention, negligent hiring, negligent supervision, and negligent entrustment.
Negligent retention refers to retaining an employee when you should have terminated their employment after they engaged in behavior demonstrating that they could be a risk to others . In many cases, such a claim would be made against an employer if they were aware of past misconduct by the employee but did not terminate their employment after the offending act occurred. Negligent hiring and negligent supervision are similar in that the employer does not perform sufficient due diligence when hiring or supervising the employee. Negligent entrustment is even more clear-cut than this in that it involves giving the employee the means by which they are negligent.
Another major factor that courts look at is whether the negligent act was performed within the scope of employment. If the employee is engaging in the misconduct during work hours or performing job-related tasks when the incident occurs, the employer has a better chance of succeeding with the claim than if the misconduct occurs outside the purview of their employment.

What Can Employers Do to Protect Themselves?

To effectively safeguard against the occurrence of negligence, employers are encouraged to take proactive measures to both prevent and prepare for negligent actions of their employees. One way that employers can decrease the likelihood of the negligent conduct of employees is by ensuring that both supervisors and employees are trained about holding themselves and their coworkers accountable for bad behavior. Employers should also consider implementing written policies to ensure that employees understand what is expected of them and to minimize the opportunity for negligent actions. Some examples of written policies companies can enact: To mitigate damages for their negligence or the negligence of their supervisors, employers should consider carefully crafting avoidable actions into various accident scenarios in employee and supervisor training. Warnings are usually not enough to avoid liability for negligence; therefore, employers should avoid relying on these warnings alone in order to insulate themselves from negligent conduct of their employee.

What Can Happen to Employees?

If employers can sue employees for this type of issue where does that leave employees? While employees may have liability insurance or umbrella coverage, those coverages might be secondary or might not even apply. Furthermore, if an employee is named as a co-defendant in a civil suit, the employee might see his or her policy become primary and being in that position could increase the employee’s premium. There is also the possibility for punitive damages which can range from tens of thousands to millions of dollars and while the conduct may not be intentional it is often still considered egregious and can lead to a joinder of an employee with resultant substantive increases in damages . There are also some impacts to future employment. This becomes most obvious with medical professionals as they are required to report certain types of disciplinary action or accusations by their state authority. Additionally, many employers look at public record searches and see that searching the employee’s name on the internet brings up the civil suit. The employer can either be concerned about the civil suit or be concerned that those type of searches are routinely done by current and potential patients. Finally, there is the general pressure of having to explain a civil suit against oneself to anyone who asks.