Like any employer, contractors can be held liable for the willful misconduct of their employees, even if the employees’ actions occur outside the scope or place of employment. So goes the warning from Tony Raker, vice president of Communication for American Background Information Services, Inc., a federally regulated consumer reporting agency based in Winchester, VA.

“This form of liability is defined by the legal theories of negligent hiring and retention,” said Raker. “While these theories are not necessarily new, what is worthy of notice is the increase in negligent hiring and retention claims.”

Negligent hiring and retention claims have been on a rapid rise, according to Raker. He said this rise could be perceived as part of a larger trend as courts continue to show increasing interest in not only determining guilt, but in compensating the victim.

“The interest in compensation can lend itself to a search for ‘deep pockets,’” said Raker, “and the offender’s employer is a likely candidate.”

According to a study by Liability Consultant’s Inc., a consulting firm specializing in premises liability, the average settlement in these cases is now over $1.6 million.

“Such sensational monetary judgments are sure to attract attention among potential plaintiffs and the lawyers are eager to try their cases,” said Raker. “As awareness continues to increase, it could be argued that this type of litigation will gain more and more momentum.

“More than ever, employers need to clearly understand what negligent hiring and retention is, what responsibilities employers have to create a safe environment through employee selection, and what actions are necessary to reduce the risk of liability and loss.”


According to Raker, the first step in prevention is a firm grasp on how negligence in hiring and retention is defined. “Negligent hiring is based on the idea that employers have a duty to exercise care when selecting employees,” he said. “In other words, an employer must adequately screen individuals by performing a ‘reasonable’ investigation of the applicant’s background. Negligence occurs when an employer does not perform this ‘duty of care’ by failing to investigate, conducting an inadequate investigation, or hiring an applicant who is unfit, based on information uncovered during an investigation.

“Negligent retention is only different from negligent hiring in the timing the employee is determined unfit for employment. If the employer discovers during the course of employment that the employee is unfit and fails to take appropriate action, then negligence has occurred by ‘retaining’ the employee.”

According to Raker, demonstrating that an employee was unfit for a particular job is one of the key elements in claiming that the employer was negligent.

“There are no clear guidelines or legislation in place to help determine whether someone is considered unfit for certain jobs. Common sense and the outcome of previous litigation are the best sources available,” said Raker, adding, “The most common evidence used to demonstrate an employee is unfit for a particular position is evidence of past criminal or inappropriate behavior.”

When criminal behavior was found and involved violence or other serious offenses, Raker said negligence suits have been the most successful.

“The individuals were considered improper choices since their jobs involved contact with the public or sensitive access to people and their property,” he said. “Jobs that include this kind of exposure to the public have been held to higher standards by the courts.”

Raker noted a fast food chain was sued for $200,000 when a worker assaulted a three-year-old child, and it was discovered that the individual had a criminal record that included assault. According to Raker, another suit was filed for $5 million against a property management company when a manager used a passkey to gain access to an apartment and sexually assaulted the tenant. The management company settled out of court, he said, when it was discovered that the manager had been convicted of apartment burglary several years before.

“Employers have also been barred from using ignorance of the employee’s past as a means of avoiding liability,” said Raker. “Courts have held that negligence not only occurs when the employer knew, but also when he should have known the employee was unfit.

“Employers have been accountable for what they did not know if it can be shown that additional efforts to investigate would have uncovered information that made subsequent misconduct foreseeable.”


So, as a contractor who employs people, how much screening is enough to avoid possibly crippling liability?

“This question has no easy answer,” replied Raker. “The level of screening should be proportionate to the risk created by a particular position.

“Jobs that involve exposure to the public should be carefully considered. Positions that give persons access to children, elderly persons, patients, master keys, private homes, personal property, and dangerous materials need to be handled with extra care.

“Whatever the conditions of the employment are, the best defense against this kind of liability is a well-crafted plan, consistently followed and carefully documented.”

According to Raker, the use of a properly drafted application, skilled interviewers, and verification of all employment and education claims should be a part of any screening program. Other important elements he suggested include:

  • Criminal history;
  • Driving record;
  • Credit reports;
  • Drug testing; and
  • Personality and honesty tests.
  • “It is important to consult state and local laws that govern access and use of this information in making employment decisions.”

    For more information regarding negligent hiring and retention, visit American Background Information Service’s website, www.american

    Sidebar: What to Consider When Hiring

    In the eyes of Tony Raker, the message to contractors and employers is clear: Be prepared to defend your hiring practices against claims of negligence.

    “If employers ignore the risk poor hiring practices can create, then they may have to answer for the misconduct of their employees,” warned Raker, vice president of communication for American Background Information Services, Inc. “If failure to properly screen an employee is connected to a victim’s injury or loss, the employers may find themselves reaching deep into their pockets to compensate the victim.”

    Here are some helpful tips:

  • As we all know, interaction with the public is part of the job of being a technician. Back-ground checks are just one more way to ensure those technicians being sent into homes are trustworthy enough to be allowed in.
  • Interviewing is a vital part in any application process for any job. However, in the hvacr business, it pays to be extra careful. “The use of skilled interviewers should be a part of any screening process,” said Raker.

    This means a contractor should actually take a “How to Interview” class. This will allow the contractor to notice things in people’s actions that they may not normally notice.

  • Something else that is less costly, but could be just as effective, is reading. A contractor can read books on interviewing.
  • Have a very detailed paper application — and follow up on all information put on that application. Yes, it is a pain to have to call reference number after reference number, but what is 15 minutes compared to losing $1.6 million?
  • Make sure those filling out applications know they must put down contact numbers. If they do not have one, hold the application until they get the number and name of the person they worked for. If they say the person they worked for is no longer there, still ask for the name because chances are the company in question will have a way of getting into contact with him (or her).
  • Publication date: 01/29/2001