Employee Misdeeds, Employers Liable for

Recent Rulings Hold Employers Vicariously
Liable for Misconduct of Their Employees

by James B. Sherman, Esq.

Both the Minnesota Supreme Court and the Court of Appeals issued recent decisions under the doctrine of "respondeat superior," which stems from the proposition that employers should be held liable for unlawful conduct of their employees when it occurs within the scope of employment. Although this sort of vicarious liability is not new in the law, these decisions signal the courts’ broadening view of:

• conduct that falls within "the scope of employment" such that an employer is liable for the acts of its employee, and
• the types of liabilities that may be imposed vicariously upon employers.

The most recent case involved claims of assault and battery, sexual abuse, and infliction of emotional distress brought against a temporary crisis shelter for the criminal acts of its program counselor towards a 15-year-old resident. In dismissing the complaint, both the trial court and the Court of Appeals had determined that the shelter was not liable for the unlawful acts of the program counselor because his actions were criminal, violative of the employer’s policies and performed purely for personal gratification. These facts persuaded the lower courts to determine that the counselor was acting outside the scope of his employment and, therefore, the crisis shelter should not be held liable for his wayward conduct. The Supreme Court in an en banc decision disagreed, emphasizing that "an employee’s act need not be committed in furtherance of his employer’s business to fall within the scope of his employment," nor, the court reasoned, should the employee’s motives have anything to do with the imposition of vicarious liability on the employer.

The Supreme Court allowed the plaintiff to proceed with her claims against the crisis shelter because she had produced evidence by way of an expert’s assertion that inappropriate sexual contact or abuse of power between counselors and residents was a "well-known hazard in this field." The court determined this evidence was material to the key issue of whether the counselor’s acts were foreseeable, related to, and connected to acts within the scope of his employment. Consequently, a general rule of thumb is that employers may be held liable for the unlawful acts of their employees if an unlawful act could not have occurred but for the employment relationship and if it was a "foreseeable" hazard of the job. As this case demonstrates, however, the foreseeability of employee misconduct will be left to the so-called experts and, ultimately, juries.

In the second case, the Court of Appeals held a law firm vicariously liable for statutorily imposed treble damages for the fraudulent acts of one of its lawyers. Even though the statute that provided for the imposition of treble damages appears to be directed at the guilty attorney, once the court concluded that the defendant attorney was acting within the scope of his employment it held the employer law firm jointly liable for all statutory damages. Similar to the Supreme Court’s decision, the Court of Appeals held that "the liability of a law firm under this statute is based not on its knowledge of or participation in the fraud, but on its employee’s violation of the statute while acting in the scope of employment."

What lessons may be learned from these decisions? Unlike the more well known "direct" theories of employer liability (e.g., intentional acts or negligent hiring, training, retention, etc.) vicarious liability is imposed on employers regardless of whether they know or have reason to know of an employee’s misconduct and even where the employer maintains policies and/or expressly prohibits a particular unlawful act. Clearly, however, employers have every right and responsibility to manage their operations and their work forces to try to avoid problems with the law. Written policies alone are not enough. Training, education, and supervision are essential. Employers in fields where for various reasons the risk of improprieties between employees and others is greater and, thus, more "foreseeable" (e.g., schools, camps, health care and day care facilities and, yes, even law firms) must be especially vigilant. Because employers are being held more and more accountable for their employees’ actions employers should not hesitate to demand accountability from their employees.

Posted 9/1/99