Negligent Hiring or Supervision – A Form of Employer Liability
In plain language: Negligent hiring or supervision means that an employer didn’t properly check a new hire's background, or didn’t properly supervise an employee, resulting in harm to others. It's like hiring a bus driver without checking if they have a valid license, then they cause an accident.
Technical definition: Negligent hiring or supervision is a legal concept where an employer is held liable for their employees' actions that harm third parties, if the employer failed to practice due care in hiring or failed to properly supervise the employee. This concept commonly appears in the areas of employment practices liability insurance (EPLI) and commercial general liability (CGL).
A common mistake in agencies is underestimating the importance of properly vetting and supervising employees. This can lead to lawsuits based on negligent hiring or supervision, which are often costly and damage reputations.
TL;DR
What Is Negligent Hiring or Supervision in Insurance?
In the realm of insurance, negligent hiring or negligent supervision is a significant concept. It's the legal theory that if an employer doesn't adequately research a potential hire's background (negligent hiring), or doesn't correctly supervise a poorly-behaving employee (negligent supervision), the employer could be sued for damages if the employee causes harm.
These concepts typically appear in employment practices liability insurance (EPLI) policies. They are part of liability coverage, specifically relating to the potential risks an employer faces in scenarios involving employee actions. Negligent hiring or supervision is part of what's known as employer liability, which highlights the legal responsibility of employers towards actions taken by their employees.
Keep in mind that this often varies by state and carrier; always check the specific policy form.
Key Related Terms to Know
Common Questions About Negligent Hiring or Supervision
What does negligent hiring mean?
Negligent hiring refers to a scenario where an employer fails to adequately research a potential employee's background, and this employee subsequently causes harm to others while working. For example, not checking the criminal records of a home care aid who later robbed a client would be considered negligent hiring.
What can make an employer liable for negligent supervision?
If an employer knew about previous acts of negligence or harmful behaviors by an employee but failed to supervise them properly, thereby allowing further harm to occur, this could lead to a charge of negligent supervision. For instance, if a managing board of community supervision knew about an employee's professional negligence, but did nothing about it, they could be held responsible.
Can an employer be held liable for an independent contractor's actions?
Generally, an employer cannot be held liable for an independent contractor's actions. However, there are exceptions particularly if the contractor poses a particular risk, or if there's an inherent unfitness. This is considered vicarious liability, not negligent hiring or supervision.
What defenses can an employer use against negligent hiring or supervision claims?
Employer defenses could include asserting that they exercised reasonable care in hiring and scrutinizing the employee's credentials. Additionally, employers may argue that the employee's harmful actions went beyond the scope of employment, or refute claims of foreseeability, i.e., they could not reasonably have foreseen the employee's actions.
Negligent Hiring or Supervision vs. Negligent Retention
The core conceptual difference between negligent hiring or supervision and negligent retention centers around when the employer's negligence occurred. In negligent hiring or supervision, the negligence occurs at the hiring or supervision stage. In negligent retention, however, the negligence takes place when an employer continues to retain an employee despite knowing their dangerous behaviors.
Comparison Area | Negligent Hiring or Supervision | Negligent Retention
|
Primary use case | Errors made during hiring or supervision process | Retaining an employee despite knowledge of their harmful behavior |
Coverage / concept type | Employer liability, EPLI coverage | Employer liability, EPLI coverage |
Typical exclusions | Independent contractors, acts outside scope of employment | Actions taken outside the scope of employment |
Who is most affected by errors | The employer and third parties harmed by employee's actions | Third parties harmed by the retained employee's actions |
Common mistakes | Failing to conduct adequate background checks, poor supervision | Ignoring employee's harmful behavior, failing to take corrective action |
Real Claim Examples Involving Negligent Hiring or Supervision
Scenario 1: A corporation hired a manager despite previous allegations of harassment at past jobs. After several harassment claims at the new job, victims sued the corporation for negligent hiring, arguing that the company should have been aware of the manager's past and predicted his future actions.
Scenario 2: An insurance company hired a new agent without conducting a thorough background check. It later surfaced that the agent had previously been fired for insurance fraud. When the agent’s fraudulent activities were unveiled at the new company, the company faced a negligent hiring lawsuit.
Scenario 3: A fast-food restaurant manager failed to adequately supervise his late-night team, often leaving them to run the store unattended. When an employee assaulted a coworker, the victim sued the entity for negligent supervision.
Limitations and Common Mistakes
How to Explain Negligent Hiring or Supervision to Clients
Personal Lines client: Think of it like hiring a babysitter without checking their references, then they cause harm to your child. In this case, you could be held responsible for 'negligent hiring'. So businesses need to thoroughly vet new hires and properly supervise employees to avoid being held liable.
Small Business owner: When you hire an employee, you need to check their background thoroughly. If you miss something like a criminal conviction, and then they harm someone while working for you, you could be sued for negligent hiring. Insurance can help protect you in such cases.
CFO or Risk Manager: Negligent hiring or supervision is a legal risk that our organization must take seriously. We need to exercise due diligence in our hiring practices and maintain proper supervision, as failure to do so could result in significant liability if an employee's actions result in harm to others.