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When is an Employer Liable for Negligent Hiring?

Posted by Inna Gorin | Sep 27, 2022

It happens more often than you might think – an employer hires a new employee who ends up causing harm to a customer or another third party. When this happens, the employee is liable to the third party, but is the employer?

When is an Employer Liable for Negligent Hiring?
Employers might be liable for negligent hiring if their employee causes harm to someone.

Under the doctrine of negligent hiring, they can be. If an employer would have discovered a potential risk of the employee's hiring if they had performed a reasonable investigation before hiring, they are more likely to be held liable for negligently hiring the employee. This determination, of course, depends on the specific California laws.   

Simply put, employers are generally liable under the doctrine of negligent hiring when one of their employees causes harm to a third party (i.e., a customer) and the employer knew or should have known the employee's risk of causing harm.

Further, employers are liable if an employee causes injury, and the employer would have discovered their potential risk of harm if it conducted a reasonable investigation.

Regarding the specific standards for liability, California law states that employers are liable if their negligence was a “substantial factor” in causing a victim's harm. Victims in these cases could file negligent hiring claims against employers for compensatory damages and possibly punitive damages.

Employers should take some direct steps to help avoid liability under negligent hiring laws, such as conducting criminal background checks of job applicants, including checking references during a routine screening process and verifying their work history. Let' review further below.

What is Negligent Hiring?

Negligent hiring is a claim that can be made against an employer for their employee's actions. The injured person can be another employee or a client of the employer.

To bring such a claim, the victim must prove that the employer is liable for their injuries because they either knew or should have known of the employee's potential to cause harm before hiring them.

What is Negligent Hiring?
In California negligent hiring cases, there is a four-part test to determine if an employer is liable.

In other words, negligent hiring is a specific legal claim made by someone injured by an employer's employee. The injured party can be a client of the employer or a coworker of the harmful worker.

When a victim files a negligent hiring claim, they assert that an employer is liable for their injuries because the employer knew or should have known of the employee's risk of causing harm before hiring the harmful worker.

These types of claims are based on California's negligent hiring, supervision, or retention laws under the Judicial Council of California Civil Jury Instructions, CACI 426, Negligent Hiring, Supervision, or Retention of Employee. 

For instance, if a daycare overlooked a job applicant's criminal history of sexual assault when hiring them, and that employee sexually assaulted another employee or one of the children that attends the daycare, the daycare would be liable for negligent hiring because they knew of the employee's risk of sexually assaulting someone.

What is California's Negligent Hiring Law?

States do differ in how they apply the negligent hiring law. Some states use a different standard when deciding if an employer is liable for their employee's actions.

These states might consider an employer liable for negligent hiring if it hired, supervised, or retained an employee, knowing that the employee was unfit for the role or did not take reasonable care to discover if the employee was unsuitable.

Other states presume that if an employer has conducted a background check during the hiring process, they cannot be found liable for negligently hiring an employee.

In California, courts use a four-part test to determine if an employer is liable. This test asks whether:

  1. The employee was incapable of, or incompetent to, execute the work they were hired to do,
  2. The employer knew or should have known that the employee was incapable or incompetent and that it produced a specific risk of harm to others,
  3. The employee's incapability or incompetence injured the plaintiff, and
  4. The employer's negligence in hiring, supervising, or retaining the employee was a significant cause of the plaintiff's injury.

What Are the Damages in Negligent Hiring Cases?

If a victim can successfully prove that the employer was negligent in their hiring, the employer or insurer must pay the victim certain damages. These damages are known as compensatory damages and can be either economic or non-economic, such as the following:

  • lost wages,
  • future lost earning capacity,
  • property damage,
  • medical expenses,
  • out-of-pocket expenses,
  • disfigurement,
  • reduced quality of life,
  • pain and suffering.

Victims might also try to recover punitive damages if the employer's hiring decision was exceedingly wanton or reckless. Punitive damages punish employers for their actions and deter others from performing similar behaviors.

In California, punitive damages are awarded in personal injury cases when the plaintiff can prove by clear and convincing evidence that the defendant acted maliciously, oppressively, or fraudulently.

Plaintiffs will be awarded punitive damages for an employer's negligent hiring if they can prove that the employer's hiring practices were malicious, meaning intending to cause the plaintiff harm or conducted with a willful and conscious disregard for the safety of others, oppressive (subjecting a person to cruel and unnecessary injury in conscious disregard of the plaintiff's rights), or fraudulently made with the intent to conceal a material fact.

How Can an Employer Avoid Liability?

From an employer's viewpoint, there are some tips to help avoid liability for negligent hiring, supervision, and negligent retention, such as the following:

  • Conduct a background check, including criminal history,
  • Verify their alleged work history,
  • Document pre-employment investigation work,
  • Implement a stricter policy on hiring practices,
  • Check references listed on their application,
  • Review applicant's posts on their social media accounts,
  • Hire a private investigator if necessary,
  • Seek advice from an employment lawyer.

Suppose the negligent acts of an employee have injured you. In that case, you may seek compensation from that individual's employer, especially if the employer knew or should have known that their employee posed a potential risk to others.

Personal injury attorneys understand the complexities that a negligent hiring claim might present and will be able to explain the best course of action for your case.

We offer a free case evaluation and work on a contingency basis. You don't pay any fees unless we win your case. Injury Justice Law Firm has offices in Los Angeles, California.

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About the Author

Inna Gorin

Inna Gorin, the founding Partner of Injury Justice Law Firm modeled the Firm after her ideals and principles of what skilled, aggressive and tenacious representation of individual clients should embody. Ms. Gorin's mission is to level the playing field, and provide her clients with the same level...


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