July 20, 2015
Canadian Law has long recognized that employers are, in certain circumstances, responsible for the wrongful actions of their employees. Cases in which employers may be found vicariously liable can vary, below is a summary of the general principles governing an employer’s vicarious liability.
There are two broad categories of circumstances in which employers will be held liable for torts or wrongful actions committed by their employees: cases in which the act in question is authorized by the employer and cases in which, though not expressly authorized, the nature of the act is such that it is sufficiently connected to conduct that was authorized by the employer.
It is especially important for employers to fully appreciate the latter of these two categories and the types of cases that can fall within it. While it may be somewhat intuitive that an employer would be held liable for its employee’s conduct where that conduct was directed or authorized by the employer, employers may find themselves liable for employee actions which were not only unauthorized but which run contrary to the employer’s instructions or expectations. Cases of this nature include willful and deliberate wrongs committed by employees (e.g. fraud, theft, assault, sexual assault, etc.). Courts have repeatedly found employers liable in such cases on the basis that the employer, through its activities and through its employees, has introduced or materially increased a certain risk into the community. Where the employer’s contribution to such risk is sufficiently significant, courts will hold the employer liable for an employee’s wrongful actions.
It is said that the policy rationale that justifies fixing an employer with liability for its employee’s wrongs is twofold – seeing that the innocent party that has suffered a loss receives fair compensation (on the assumption that an employer will more often than not be in a better position to bear the burden of such compensation than the individual employee whose actions caused the harm) and deterrence. The types of behaviour and practices at which the deterrence objective takes aim provide useful considerations for employers who wish to mitigate, to the extent possible, their exposure to liability for employees’ wrongful acts. Such considerations include:
Having clear policies and complaint procedures, which can be included in an Employee Handbook, could be a great tool for ensuring that employees are aware of the precise scope of their duties and responsibilities, of the employer’s expectations and of the avenues available to them in case problems arise.
Given the potentially far-reaching implications of vicarious liability, employers should be aware of the risks and should consider these and other factors in a continuous effort to mitigate the level of exposure to vicarious liability.