The Risk of Negligent Hiring/Retention

A company’s decision to perform pre-employment background checks, and the extent to which such investigations are undertaken, are a key part of the strategy to manage risk related to negligent hiring lawsuits.

The doctrine of negligent hiring and negligent retention traces its roots to duty of care.  In human capital management, this translates to the employer’s obligation to protect co-workers and members of the public with whom they might be expected to interact in the course of their responsibilities by hiring and retaining only safe and competent employees.

If reasonable investigation would have discovered that employee to have a tendency to cause harm, it may be considered that there has been a breach of duty of care, which may in turn give rise to a cause of action for negligent hiring or retention.  While exact legal boundaries vary from jurisdiction to jurisdiction, an employer may be held responsible when:  

• the employer hires and/or retains an incompetent employee
• the employer knows -- or should have known – that the employee was unfit to perform his/her job
• the employer acts in a manner, or is similarly negligent in failure to act
• the injury to plaintiff was foreseeable
• the injury to plaintiff was proximately caused by the employer’s negligence.

A key consideration is “forseeability”, and to that end, many negligent hiring/retention lawsuits look at whether or not the employer performed criminal history checks and other background screenings sufficient to the position for which the employee was hired and responsibilities assigned. 

For example, in Doe v. MCLO, an employee with a criminal record sexually abused a child and his employer was found liable for $1.75 million for negligent hiring and retention.  A vacuum cleaner distributor hired a door-to-door salesperson with a criminal record who raped a female customer in her home and in McLean v. Kirby Co., the manufacturer was found liable for $45,000 for not having required its distributors to conduct pre-employment background checks of door-to-door salespersons to prevent hiring of persons with criminal histories.  In other cases, employers have been held liable for neglecting to run credit checks, license checks, substance-abuse tests and other screenings and verifications.

In addition to consulting their legal advisors, employers are advised to team with background checking professionals to create screening specific to various job descriptions and roles.  By combining criminal history background checks with the investigations and assessments that support specific responsibilities and skills, employers reduce risk and gain peace of mind.