State Supreme Court Sides with Employers on Liability for Employee Actions

(July 7, 2011) In a unanimous decision, the California Supreme Court has sided with employers in an important court case addressing employer liability for employee actions at work and whether certain evidence may be used after the employer admits such liability.

The decision confirmed that when an employer admits vicarious liability, the plaintiff is barred from pursuing additional tort theories based on the employee/employer relationship.

The ruling in the case of Diaz v. Carcamo, et al. echoed an argument made by the California Chamber of Commerce and the Civil Justice Association of California (CJAC) in a friend-of-the-court brief filed last October.

No Additional Liability

The state Supreme Court agreed with the CalChamber/CJAC argument that once an employer admits vicarious liability for an employee driver’s negligence in causing an accident, the plaintiff cannot also pursue other legal theories, such as negligent hiring and/or retention, against the employer to recover additional damages.

The court upheld the policy rationale behind Proposition 51, a 1986 ballot initiative approved by voters to rein in inequitable damage awards by providing that parties to a negligence action pay no more than their respective percentage of fault for an injured party’s non-economic damages.

Once the employer acknowledged its vicarious liability for the employee’s negligent driving in the course of employment, the Proposition 51 objective of allocating losses objectively “is not served by subjecting the employer to a second share of fault,” the court wrote. The court affirmed that for the purpose of allocating fault, the employer in essence steps into the shoes of the employee.

The Supreme Court returned the case to the trial court for a complete retrial.

Law Explained

Before the recent upswing in negligent hiring/retention cases, employers generally were held liable only for negligent and intentional acts of employees done in the course and scope of employment when such acts injured others, under the doctrine of respondeat superior. Under that doctrine, injured third parties generally could not recover against employers if the wrongful acts occurred outside the scope of the employee’s employment or were not in furtherance of the employer’s business.

Under the negligent hiring/retention doctrine, however, injured third parties have, in certain situations, successfully sued employers for negligent hiring/retention of employees who engage in criminal or violent acts that occur after working hours or outside the scope of employment. Negligent hiring/retention, therefore, enables plaintiffs to recover damages in situations where the employer previously was protected from liability.

Staff Contact: Erika Frank