Negligent hiring is the failure to properly screen employees, resulting in hiring someone with a history of violence or crime – and who commits a violent or criminal act. It normally refers to an employer’s obligation not to hire an applicant that they know or should have known was likely to undertake criminal conduct against subject employees and even third parties.
Negligent Retention is retaining an employee after the employer becomes aware of the employee’s unsuitability (due to a history of violent or criminal acts), thereby failing to act on that knowledge. Either way, the company can be sued if the employer did not do an adequate background check on the new hire, or doesn’t act when the employee manifests the unsuitable characteristics and harms another.
Negligent hiring and retention is a deadly weapon in the arsenal of plaintiff lawyers seeking recovery for their clients. When a lawyer prepares a lawsuit, every possible gun in that arsenal is brought out, fully primed and loaded. In case one doesn’t hit the target and do the most damage, maybe another one will. It is called alternative pleading and it is done all of the time.
In cases when lawyers are trying to reach into the deep pockets of businesses and their insurers, this cause of action is like manna falling from heaven, providing outrageous judgments in states which allow punitive damages. Some examples(1):
- A furniture company paid $2.5 million for negligent hiring and retention of a deliveryman who attacked a customer in her home.
- An employee with a criminal record sexually assaulted a child; $1.75 million was awarded for negligent hiring and retention.
- A nursing home was found liable for $235,000 for the negligent hiring of an unlicensed nurse with 56 prior criminal convictions, who assaulted an 80-year-old visitor.
- A twelve million dollar settlement was awarded in negligent hiring, training, and supervision suit. The suit alleged an armored truck company did not adequately investigate its employee’s past work record and did not provide adequate driving training.
- An employer settled a suit for $2.5 million, seeking to hold it liable for negligent hiring and entrustment of an intoxicated security guard. The guard had an on-duty traffic accident in a company car which killed him and another motorist.
- A store customer detained by a security guard as a suspected shoplifter and injured while being restrained was awarded $10 million in damages in a suit against the store. He was claiming negligent hiring and training of guard and excessive use of force.
- A $5 million settlement was awarded to the family of a deceased female tenant, in a suit against an apartment complex owner and management. The suit claimed that the tenant was killed by the brother of the complex’s assistant manager and that it was negligent hiring to hire an assistant manager without a criminal background check.
Over 78% of our business contacts or customers had originally NEVER heard of negligent hiring. Most small-to-medium sized business owners who heard about it genuinely believe that it can only affect big corporations. Yet per the American Data Bank:
- 45% of all applicants either have a criminal record, a bad driving record, a worker’s compensation claim or a bad credit history.
- 95% of all companies in the USA are victims of theft, and yet only 10% ever discover it.
- Estimates of fraud committed by employees cost US companies approximately $20 billion annually. Workplace theft tops out at more than $120 billion annually.
- 30% of all business failures are caused by employee theft.
Plaintiff lawyers revel in any new development that enables large judgments meaning larger fees. They are paid on a contingency basis, receiving a percentage of the amount recovered – sometimes up to 50% of the gross recovery. The attorney fronts all client’s expenses (many times all medical, even paying for surgery and support of the client), while the case is being prepared, litigated and appealed. He or she has lots riding on winning, and will take every opportunity to ensure a win and therefore return of costs.
RECORD KEEPING CAN SAVE YOU
How do you keep from being sued for negligent hiring or for violation of any of the other myriad of laws that hang over your head like the sword of Damocles? How do you win if you are sued or assure yourself of any measure of security? The best way is to be meticulous in record keeping from the beginning of the hiring cycle through to the end.
The EEOC and the Office of Federal Contract Compliance Programs (OFCCP) have rules that must be followed, and these include record keeping. A grim example of failure to comply with these requirements is the recent case of Goodyear Tire and Rubber Company being ordered by an administrative law judge to pay $925,000 in back wages to 800 female job applicants who alleged hiring discrimination at a Goodyear plant in Virginia. Goodyear also agreed to hire 60 of the women, conduct annual training for plant managers and provide semi-annual reports to document compliance. It was all because of a failure to maintain adequate records to prove compliance.
What can you do to comply and protect your company? Precise record keeping is paramount because poor or missing records make it hard to defend yourself against lawsuits. You must be proactive. Record keeping begins early in the hiring process.
Our No-Fail Hiring System KIT contains all the legal documents and procedure that ensure (1) you will be protected during your next hiring mission and (2) you will have the expertise to attract and select top players ONLY!
Don’t turn your next hiring mission into another horror story.
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To your success in hiring,
Author “No Fail Hiring.”
(1) Book “No Fail Hiring,” pages 24-27.