Can Employers Be Held Liable for Employees' Crimes?

What happens when an employee commits a crime? Or even just a wrongful act (not necessarily a crime)?

Is the employee liable alone? Or can the employer be held liable as well?

This is an interesting question, in light of the Halliburton VP's story that we wrote about this week. Joseph Andolino, senior vice president of Halliburton's tax department, was arrested in a prostitution sting, according to the Houston Business Journal.

While his actions don't necessarily render Halliburton liable, since there are no reports that he committed the crime while on the job, it still raises the question as to when an employer can be sued for the crimes (or even torts) of its employees.

Let's talk torts first.

Torts aren't criminal acts, but they are wrongful acts (or negligent acts) that cause harm to another person. If the tort is committed while the employee is acting within the scope of his job, then a lawsuit against an employer can be brought under vicarious liability. That means the employer and employee have an agency relationship, and the acts of the employee can be attributed to the employer.

Now, let's talk about acts done outside the scope of employment, such as crimes. A crime would generally fall outside the job scope, whether done on the job or outside of the job. If someone is hurt by an employee's criminal acts, an employer could potentially be held liable under the theory of negligent hiring. This theory holds the employer liable for hiring someone who may have been a harm to others, without adequately vetting the employee.

Vetting. That's an issue. Background checks are essential, but not everyone does them.

In the Halliburton VP's case, there's very little potential liability to the employer (if any) for the VP's alleged criminal acts, since they weren't committed within the scope of his employment. But depending on whether Halliburton has an employee code of conduct in place, the VP could potentially face work-related consequences in addition to his criminal charges.
source;http://houstonemploymentlawsblog.com/2012/10/can-employers-be-held-liable-for-employees-crimes.html

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