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Can a business be held liable for other parties’ actions?

On Behalf of | Dec 23, 2022 | Business Law

Businesses should take actions to avoid liability for unlawful or negligent acts. But they must also assure that precautions are taken concerning the employees and other parties they control.

Vicarious liability

Businesses may face tort litigation because of the actions or inactions of their employees and other individuals they control through vicarious liability. This liability arises when the business is  responsible for or controls the actions of a third party. Generally, the business may be liable if the employee or the controlled third party acted or omitted to act with reasonable care. Malicious intent is not required. The third party that engaged in the unlawful or negligent act may also bear some share of the legal liability.

Examples

Vicarious liability relates to numerous unlawful and negligent acts. A business may be liable for unlawful acts committed by employees, such as sexual harassment.

The business may also be liable if its employee harmed someone or caused damage by operating equipment or machinery negligently or inappropriately. For example, a construction company may be liable for a construction worker who incompetently operated a crane and toppled the walls of an adjacent building.

A notorious example is the Exon Valdez oil spill. That company was considered vicariously liable for actions leading to the spill of 10.8 million gallons of crude oil into the sea that also damaged shores. The company was found liable for its inadequate supervision of the ship’s captain, crew member fatigue and the condition of the vessel’s radar equipment.

Prevention

Employers can take reasonable steps to reduce their vicarious liability exposure. These include enacting training and policies to help prevent unlawful acts such as sexual harassment and discrimination.

Safety training and policies are also important measures. Implementing safety measures, such as requiring rapid clean up of spills, can prevent problems. Having video surveillance and proper illumination are other methods.

Careful screening and hiring of employees are other important precautions.

Attorneys can assist business with protecting their interest in a lawsuit. They can help them limit liability in these actions.

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