Vicarious Liability: Corporate Criminal Liability

Vicarious Liability: Corporate Criminal Liability and Tort Law

In tort law, vicarious liability refers to the legal doctrine "that imposes responsibility upon one person for the failure of another, with whom the person has a special relationship (such as parent and child, employer and employee, or owner of vehicle and driver), to exercise such care as a reasonably prudent person would use under similar circumstances" (Vicarious liability, 2011, West's Encyclopedia of American Law). In contrast, in criminal law "an employer is legally responsible for the actions of its employees. However, this rule only applies if the employee is acting within the course and scope of employment. In other words, the employer will generally be liable if the employee was doing his or her job, carrying out company business, or otherwise acting on the employer's behalf when the incident took place" (Employer liability, 2011, Nolo). A good example of this is seen in the case of pizza delivery firms that promise an (unrealistically) short delivery time, thus causing drivers to speed. If the driver gets into an accident meeting his or her time goal, the employer will be liable. The obvious incentive of this policy is to encourage employers to act responsibly, and not put profits and an advertising gimmick ahead of the safety of the public.

In tort law, the relationship between the offending partners is not formal and contractual, such as the relationship of a parent and a child. However, it is generally understood that, given the nature of the personal relationship, there is some implied responsibility. For example, if a child violates the law getting drunk on his or her parent's premises, particularly if the parent was present and knew about it, the parent might be vicariously liable for any crimes the child committed. Hosts have been found liable for the crimes committed by intoxicated party-goers, if the guests are allowed to knowingly drive home while intoxicated. A parent may be liable for the actions committed by a child using the family car -- as well as the actions of a vicious family dog, if he or she knowingly did not take proper precautions to secure a dangerous animal.

In criminal law, the relationship is usually contractual between the employer and the employee. However, the doctrine of vicarious liability "only applies if the employee is acting within the course and scope of employment" (Employer liability, 2011, Nolo). While an employer might be responsible for a pizza delivery driver that crashes while racing to fulfill an order, or for a restaurant employee that unknowingly serves tainted food because the employer ignored the 'sell by dates' of the ingredients, the employer is not liable for the actions of the employee while not on the job. In some instances, this can generate a grey area -- for example, what if a delivery driver takes a detour while driving the company car, and gets into an accident in the McDonald's parking lot while eating lunch? In general such actions are not found to be the responsibility of the employer. "Since employers receive benefits of the activities of their employees, they should also be liable for any damage the employee may cause in performing his tasks. If the negligent act was the result of achieving the employers' profit targets, it would be unfair to sue the employees when they had been forced to be negligent by a cost-cutting employer, who would thereby profit from that negligence" (Leung 2004).

Another, related doctrine to vicarious liability is that of negligent hiring, in which an employer does not take reasonable precautions to do appropriate background checks of the employee. If a hospital hires a nurse without the necessary qualifications, the hospital may be found liable for any errors the employee performs. However, the hospital might be found vicariously liable if it hires a qualified nurse, but expects the nurse to labor under unreasonable circumstances, such as working back-to-back shifts repeatedly with a skeleton staff, or has the nurse perform her duties with improperly maintained medical devices.

The need for the doctrine of vicarious liability is manifest in the fact that it is necessary for employers to be held liable for the consequences of their policies and not blame their own imprudent actions, conducted in the name of profit, to improve their bottom line. Simply put, it is not fair to hold a teenage employee liable for improper food safety regulations imposed upon him by his or her superiors. Additionally, at times an employee may not have full knowledge of the consequences of his or her actions. Lower-level employees at Enron, for example, did not understand the scope of the fraud that their company was perpetrating.

In general, injuries related to work fall under the scope of worker's compensation law, not under the doctrine of vicarious liability. Employers are also not considered liable for employee actions such as fighting and harassment that are undertaken by the employee's own initiative (Vicarious liability, 2011, West's Encyclopedia of American Law). For the doctrine to apply there must be a close connection between the employer and the individual acting as his or her agent.