How Employees Can Get You Sued

By Ben Simmons, CLCS, Account Executive

Georgetown Insurance Service, Inc.

Silver Spring, MD

Depending on the circumstances, your company can be held legally responsible for harm caused by the bad acts of your employees. An accident with a company vehicle, harassment of a coworker or customer, damage to a customer’s property due to intentional negligence – these are just a few potential scenarios that can get businesses in hot water. Companies are often seen as being responsible for the behavior of their employees so even if you – the employer – played no part in the act itself and never intended to cause harm, you can still be held liable.

Let me give you an example. A local landscaper was performing work in a customer’s backyard when his teenage daughter walked outside to use the pool. One of the workers decided to whistle at her and make a suggestive gesture. The customer’s daughter was so distraught, the homeowner ended up suing the landscaping company (not the individual employee) for both mental anguish and pain and suffering.

While it’s not possible to eliminate these challenges completely, there are some ways businesses can reduce their risk of being sued due to an employee’s misbehavior:

Conduct Background Checks

When it comes to hiring new employees, you can’t be too careful. These days, a background check is a critical component of the pre-employment screening process. Before an individual is hired, companies should conduct a comprehensive review of a candidate’s background including employment, education, criminal records, credit history, and driver’s license records.

Background checks not only help employers find quality talent, but they also help uncover red flags before a candidate is hired that could potentially cost a company money or their reputation. Once that person is on your payroll, you assume responsibility for their behavior on behalf of the company. So, having a background check in place as part of your company’s screening process is can help minimize your risk.

Get References

It’s continually getting more difficult to deal with the risks and liabilities that can arise from a bad hiring decision. While background checks can help weed out unqualified people based on reports, it doesn’t give real insight into who a potential candidate is as an employee – and a person.

Information gathered during a reference check helps employers validate a candidate’s resume and uncover any potential ‘gray areas’ that could indicate problematic behavior. Reference checks also give employers insight into a person’s past performance and helps you learn more about their conduct, work ethic, and attitude, among other traits. Ex-employers are some of the best resources when it comes to vetting qualified candidates.

Secure the Right Insurance Policies

The moment a potential employee walks in the door for an interview, your risk begins. Employees and potential employees can sue an employer for numerous reasons including discrimination, sexual harassment, cyberbullying, wrongful termination, and more. And even if a claim made by a customer or fellow employee turns out to be meritless, your company is still responsible for defending itself, which often comes with a substantial price tag and lost productivity.

Accusations and harassment cases have dominated the news since 2017. Even with clean background checks and stellar references, you can never truly guarantee the actions or words of your employees. Employment Practices Liability Insurance (EPLI) provides protection against claims resulting from employee misconduct, and one way to safeguard your business from these financial consequences. What’s more, changing technology and growing communication channels are making it even more difficult for employers to protect themselves. Social media, email, texting, and even drones are blurring the professional lines and creating a complicated landscape for employers to navigate.

Speaking of technology, your employees often have access to sensitive information. If a disgruntled employee has the desire and knowledge, he or she could steal personal and confidential data or install some type of malware, putting the company at risk for multiple lawsuits. Many businesses still don’t have a cyber insurance policy in place but it’s becoming even more important in today’s digital world. Since there is no standard “off the shelf” cyber insurance policy, it’s important to choose the policy(s) that is best fit for your needs.

Having sound hiring practices coupled with the right insurance policies is critical to minimizing your company’s risk of being sued. From employees horsing around to someone taking an innocent statement out of context, we’ve seen and handled countless employee-related claims. As an employer, it’s always best to stay ahead of any potential issues. For more information on acquiring the right policies for your business, contact your Georgetown Insurance Service agent to discuss your options.

Have questions? Contact us to speak with a licensed insurance professional.

Disclaimer: All data, information, and opinions provided on this article, newsletter, or blog is for informational and educational purposes only. While every caution has been taken to provide readers with the most accurate information and honest analysis, please use individual discretion before making any decisions based on the information in this article, newsletter, or blog. Georgetown Insurance Service, Inc. is not responsible if its readers happen to experience loss, injury, or damage resulting from its display or use. All information is provided on an as-is basis. This article, newsletter, or blog does not represent the thoughts, intentions, plans, or strategies of any specific Insurance Carrier, Georgetown Insurance Service, Inc. partner or affiliate.
Have questions? Contact Us to speak with a licensed insurance professional.

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