In 1999, a California plumbing company hired a man who had once been convicted of domestic violence against his ex-wife. In 2003, the man made a house call that sparked a friendship with the woman living there, a relationship that eventually grew romantic. That same year, the plumbing company fired him for a variety of offenses, including drug and alcohol use and alleged physical threats against a co-worker.
Two years later, the woman he was with ended the relationship and sought a restraining order against him. He responded by shooting her to death, a crime for which he was convicted. The victim’s daughter sued the plumbing company, alleging that it was negligent in hiring the man. Although that suit was unsuccessful, the case illustrates the vulnerability businesses have to claims of injury caused by their employees.
When an employer may be liable for negligent hiring
- When the employer knew or reasonably should have known that the person was unfit for the job and dangerous. For example, if an accounting firm knowingly hired a person who served time in prison for embezzlement, a client who suffered a theft loss could plausibly claim the employer should have known the hire was unfit.
- The employer should have foreseen that the employee would harm someone. The accounting firm should have anticipated that a convicted embezzler left in charge of clients’ assets might feel tempted to steal from them. In the California case, the victim’s daughter argued the plumbing company should have foreseen that its employee could injure or kill a female customer; the court rejected that argument, saying no reasonable person could foresee the man would turn violent two years after being fired.
- The employer’s act caused the victim’s injury or harm. A client of the accounting firm could argue that if the firm had not hired the convicted embezzler, the client would not have lost funds. The California court said the plumbing company’s act of hiring the woman’s killer did not cause her death because the relationship developed outside his work duties and became romantic only after the company fired him.
There are two primary ways businesses can obtain liability insurance to protect against claims like these. For bodily injury or property damage, a Commercial General Liability (CGL) policy might provide coverage, but businesses should review policy language carefully because some policies include endorsements that exclude employment-practice 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 incidents like that. Some Employment Practices Liability (EPL) policies can provide coverage for claims by non-employees only if they include specific endorsements adding that protection.
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.
Because insurance does not replace sensible hiring practices, employers should conduct thorough background checks on applicants. Taking steps to reduce the likelihood of a negligent-hiring claim will save the business costs that insurance does not cover, such as harm to workplace morale, damage to reputation, and difficulty attracting skilled employees. A new employee is a significant investment for any business; making careful hiring decisions will save long-term trouble and expense, and businesses should discuss coverage options with an agent by choosing to 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 typically does not cover losses like embezzlement; coverage depends on policy language and endorsements.
Can background checks prevent negligent-hiring claims?
Thorough, documented background checks reduce risk but do not guarantee immunity from claims; reasonable hiring procedures are important evidence of due care.
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.