When calculating the risk that a business may face in the course of its operation, it is important for business owners to factor in the risk posed by their employees’ actions. In Illinois, like many states across the country, employers may be found liable for their employees’ actions through vicarious liability.
Through the legal doctrine of vicarious liability, a person who is injured by an employee can receive compensation from the employer, only if the employee’s conduct causing the injury was within the scope of the employee’s employment. What constitutes an employee’s “scope of employment” varies. Courts also consider the motivation for the employee’s conduct.
Generally, employers are not held liable for certain intentional acts by their employees. However, if the employee was even partially motivated by a desire to act on behalf of the employer, and partially by a desire to release his or her own aggression, the employer may be held liable.
An example of this can be a security guard dealing with a difficult customer. If the security guard punches the customer and breaks his or her nose, the employer will most likely be held liable.
While company policy prohibiting employee conduct that could open the employer to liability is a good idea, it is not guaranteed to release the employer from future liability. Even if it is company policy for security guards not to punch or physically harm customers, and the security guard in the example above was in clear violation of that policy, the employer may still be held vicariously liable for the customer’s injuries.
Another important element to consider from the employer’s standpoint is whether or not there is a clear agency relationship between the employer and the employee. If the person who causes the accident is undisputedly an employee, an agency relationship is easier to prove. However, if the person who causes the accident is an independent contractor, it is more difficult to prove the person was acting as an agent, and the business which contracted him may not be liable.
Entrepreneurs weighing different business forms under which to structure their businesses should remember that they can limit their personal exposure to the risk of vicarious liability by organizing their businesses appropriately. Using a corporation or a limited liability company is a better way to limit risk than forming a business as a sole proprietor.
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Businesses can also limit their liability for employee actions by taking care when making hiring decisions, and instituting policies that ensure employees are not taking risks when interacting with the public. For more information on how your business can better address the possibility of liability for employee actions, contact the passionate DuPage County business law attorneys at Momkus McCluskey LLC for a consultation.