When is an Employer Liable for Negligent Hiring and Negligent Retention?

What is Negligent Hiring and Negligent Retention?

Kansas law has long recognized causes of action for negligent hiring and negligent retention. Negligent hiring and retention run in a similar vein and create liability for an employer for injuries to a third party which result from “the unfitness or incompetence of the employee.” These doctrines recognize that employers have a duty to use reasonable care in the selection and retention of their employees. This duty requires the employer to hire only safe and competent employees. Liability ensues when the employer knew or should have known of the employee’s incompetence or unfitness for employment.

Negligent Hiring

Employers must use reasonable care when hiring to make sure employees are competent to perform their jobs without posing a safety threat to the public. In carrying out this duty, an employer must conduct a pre-employment investigation which should include reference checks, criminal records checks, and a review of the applicant’s driving record, depending on proposed job duties. Failure to conduct a reasonable level of pre-employment screening is negligent hiring. If the employee harms someone because of a dangerous tendency or incompetency that could have been revealed during a reasonable pre-employment screening, the employer can be held liable for negligent hiring.

For example, suppose that an employee is hired and while on the job assaults a customer. Suppose also that this employee had been convicted of aggravated assault before they were hired, but the employer did not conduct a background check. In this situation the employer would be liable for damages to the person the employee assaulted, as the employer has breached their duty to use reasonable care in selecting an employee.

However, if the employee commits an offense similar to that above but the employer was found to have performed a reasonable investigation before hiring the employee, the employer would not be liable. Est. of Vredenburg v. NCRI is a good illustration of this principle. In that case NCRI (a disaster restoration business) hired Tanner Green, who stated on his application that he was on parole and had been convicted of battery but it was due to protecting his sister from an abusive spouse. This was a lie, and Green had in fact been convicted of battery for injuring a woman while trying to rob her. NCRI contacted Green’s parole officer who also lied about the facts of Green’s first conviction and failed to mention that he was also recently convicted of battery while in prison for attacking another inmate. NCRI did not call any listed references because of the conversation with the parole officer, but did conduct a background screen on Green and knew that he had been convicted of a felony and spent 5 years in prison. Green was eventually fired from the company after repeated sexual harassment claims. A week after being fired, Green entered Vredenburg’s home (a client of NCRI) and killed her. Green had worked in her home six weeks earlier while employed by NCRI.

The jury found that NCRI had conducted a reasonable investigation into Green. Kansas parole policy requires parole officers to inform parolee employers of all adult convictions. With this in mind, the jury found that NCRI had made a reasonable and adequate investigation into Green before hiring him, and was therefore not negligent in hiring him and not liable for his actions. What constitutes a “reasonable” investigation of a potential employee can vary among different industries and can get relatively fact specific.

Negligent Retention

Negligent retention is very similar to negligent hiring, the difference being the point at which the employer knew or should have known of an employee’s incompetence or unfitness for a particular job. Evidence of negligent retention includes records of complaints, overall work records, and the employer’s knowledge of any incompetence or unfitness of an employee. If the employer had such knowledge but took no corrective action, the employer can be held liable for negligently retaining the employee.

Employers in Kansas, however, do not owe a duty to third parties to train or supervise their employees. Their duty is to exercise reasonable care under the circumstances. However, the failure to train or supervise may constitute a breach of that duty. Additionally, employers do not have a duty to ascertain a detailed history of, and then terminate, an employee performing acceptable services who is “clearly not unfit or incompetent” but still does pose a degree of risk due to previous actions.

For example, in Plains Resources, Inc. v. Gable the plaintiffs had a contractual agreement with Empire (defendants) whereby the defendants were to drill holes for an oil well. The court found that Empire had negligently retained their employee, Higgins, when Higgins intentionally sabotaged one of the drilling sites after an issue between the two companies threatened the project entirely. The court found that Empire breached their duty to use reasonable care in the selection and retention of Higgins. Higgins was described as a large, unkempt man who used his size and loud voice to threaten subordinates. Higgins eventually learned that Empire would not be able to finish the job, and on a phone call with his boss stated that he would “take care” of the well so no one else could get into it (seemingly out of loyalty to his employer and out of spite for plaintiffs). The court stated this was adequate evidence that put Empire on notice that Higgins planned on sabotaging the well. The fact that Empire did nothing with this information made them liable to Plains in negligently retaining Higgins for his conduct of sabotaging the well.

When Does and Employer Know or Should Know of an Employee’s Incompetence or Unfitness?

This is usually a very fact specific question, but the court will look at a variety of factors to make this determination. An employer is put on notice of an employee’s incompetence or unfitness for employment when they have actual or constructive knowledge of such unfitness. Actual knowledge can be shown by possessing any evidence that the employer knew that the employee was unfit (such as records of complaints or overall work record) or the employer witnessing conduct displaying the employee’s incompetence. If a reasonable investigation would have alerted the employer about the employee’s incompetence, then the employer had “constructive” knowledge of the employee’s incompetence or unfitness.

The employer does not need to foresee the precise injury claimed by a third party, but the employer is “only liable for such harm as is within the undue risk.” Foreseeability can be summarized as whether an employer can anticipate that a third party may be harmed if the employer fails to take any corrective action (like not taking proper actions after repeated complaints about an employee).

Under a negligent hiring/retention claim, liability to the employer does not result from the employer-employee relationship, but results because the employer knew or had reason to believe that “an undue risk of harm to others” would exist from the continued employment of the alleged tortfeasor. The employer is therefore only liable for such harm as is within that risk. For example, if the risk is because of the quality of the employee, the liability is only extended to the harm caused by that quality of the employee that the employer knew or had reason to know would likely cause the harm. The jury determines whether the risk of harm was reasonably foreseeable to the employer.

Additionally, there must be some causal relationship between the incompetency of the employee and the injuries suffered by the third party. The employer, through their knowledge of such quality, must have reason to believe that an undue risk of harm exists to third parties because of the continued employment, and that the harm resulting from such employment must be within the risk of the known propensity for the employer to be liable. Absent this causal connection between the employee’s particular incompetency and the injury sustained by a third party, the employer would not be liable for negligent hiring/retention.

Summary

Think of negligent hiring as an employer just not doing their homework. An employer must at least do a minimal investigation into an applicant’s background, if they don’t and an employee hurts someone, the employer may be liable. Additionally, think of negligent retention as an employer turning a blind eye to conduct and evidence displaying the employee’s incompetence or unfitness for the job. If the employer takes no corrective action, they may be liable when the employee hurts someone.

If you or someone you know has been injured by the wrongful conduct of an employee, contact our office for a free consultation. Our attorneys are experienced in settling claims against companies who negligently hire and/or retain employees. Call our office or click here to set up your free initial consultation.