In 1999, a California plumbing company hired a man who had a prior conviction for domestic violence. A few years later he made a house call that led to a friendship with the woman who lived there; the relationship eventually became romantic. The company fired him the same year for several offenses, including substance use and alleged threats against a co-worker.
When the woman later ended the relationship and sought a restraining order, the man shot her to death and was convicted of the crime. Her daughter sued the plumbing company for negligent hiring. Although the suit ultimately failed, the case highlights how businesses can face claims for harm caused by employees.
When an employer may be liable for negligent hiring
- When the employer knew or reasonably should have known the person was unfit or dangerous for the job. For example, an accounting firm that knowingly hires someone with a conviction for embezzlement could face a claim if a client later suffers theft losses.
- When harm to others was a foreseeable result of hiring the person. In the plumbing case, the daughter argued the employer should have foreseen a risk to female customers; the court found no reasonable person could foresee the employee would become violent years after being fired.
- When the employer’s act of hiring caused the victim’s injury. A client might argue that had the firm not hired a convicted embezzler, their loss would not have occurred. Courts typically look for a direct causal link between the hiring and the harm.
There are two primary ways businesses obtain liability insurance for claims like these. For bodily injury or property damage, a Commercial General Liability (CGL) policy might provide coverage, but policy language and endorsements vary and can exclude some employment-related liabilities.
For losses such as embezzlement, a CGL policy generally will not respond because there is no bodily injury or property damage; Employee Dishonesty insurance may cover those incidents. Some Employment Practices Liability (EPL) policies can cover claims by non-employees only if specific endorsements are included.
Businesses should review their policies carefully and consider consulting coverage resources such as Hiring — Insurance Risks & Coverage to understand common gaps and options. See Professional liability insurance for court clerks for another example of how coverage details can vary by occupation and exposure.
Insurance does not replace sensible hiring practices. Employers should conduct thorough, documented background checks and maintain reasonable hiring procedures to reduce the likelihood of a negligent-hiring claim and to protect workplace morale and reputation. A new employee is a significant investment; discuss coverage options and talk to an agent.
Frequently Asked Questions
What is negligent hiring?
Negligent hiring is a legal claim that an employer failed to reasonably screen a job applicant and that the employer’s negligence led to harm caused by the employee.
Does general liability insurance cover negligent hiring?
Commercial general liability may cover bodily injury or property damage, but it typically does not cover losses such as embezzlement; coverage depends on policy language and endorsements.
Can background checks prevent negligent-hiring claims?
Thorough, documented background checks reduce risk and provide evidence of due care, but they do not guarantee immunity from claims.
Should I get employment-practices liability insurance?
EPL insurance can help with certain employment-related claims, but you should confirm whether it includes coverage for claims by non-employees and review endorsements carefully.