united-states, employmentI’ve done a basic read-through of the Negligence in Employment Wiki Page, yet I’m still kind of unfamiliar with what it’s really conveying, especially in terms of a legal understanding.
What circumstances should I be wary of?
How do I protect against negligence as an employer (any difference between my position as an executive and my position as a founder?)?
Simple logic is best. Plain English is preferred over legal rambling, although I am jdero so I love additional resources if they are applicable.
Assume a United States software-based tech start-up for context.
Your question appears to be focused on an employer’s liability for acting negligently in the course of employing its workers.1 Any claimant would have to show that:
You owed to them a duty of care. Exactly when such a duty exists varies from state to state, but generally it’s when one could foresee that the person might be harmed by one’s conduct: duties are therefore typically owed to customers, suppliers, other employees, members of the public passing within the vicinity of the workplace, etc.
You breached that duty of care. The test is whether your conduct fell below the standards of a “reasonable” person in the circumstances, i.e. would a reasonable employer have acted differently? As you can imagine, this is often the most contentious element and standards again vary from state to state.
Their loss was caused by that breach. What amounts to causation again varies from state to state, but generally excludes situations where the loss would still have been suffered even if no breach had occurred; situations might also be excluded if something unforeseeable contributed to the loss after the breach.
(1) You should also be aware that employers could face other claims in negligence (for example where they entrust a dangerous instrument to a person, or where they are vicariously liable for the negligence of their employees who are acting in the course of their employment)—but such liability is beyond the scope of this answer.
So, to answer your specific questions:
What circumstances should I be wary of?
It is impossible to give a definitive list of such circumstances: the possibilities are endless and any list that purports to be complete would be misleading, as courts will always consider novel situations on their own merits. Therefore it is sensible to talk only in general terms.
Since it’s difficult to control whether you owe a duty of care or whether your actions will cause loss, it’s often easiest to focus instead on avoiding any breach of duty. In other words, you should be wary of acting other than as a reasonable employer would do in the circumstances: in particular, where it is foreseeable that an employee could inflict some loss on a person, you should be wary of failing to undertake reasonable checks before hiring them; or failing subsequently to reasonably supervise, train or terminate them.
How do I protect against negligence as an employer (any difference between my position as an executive and my position as a founder?)?
You may be able to limit your liability by way of notice or contractual term. The extent to which your liability may be excluded or limited will depend on the type of loss being covered and particular laws of the jurisdiction in which you operate—I suggest that you consult with an attorney specialising in employment law to understand what may be possible in your case.
However the best way to protect against such claims of negligence in employment is to have a good system of HR controls/procedures: documentation, training, review, grievance and discipline. Clearly this is the responsibility of the business’s executive management (who are personally liable for their negligence in addition to their employer’s vicarious liability for the same act), but any investor (whether founder or not) would be foolish not to use his influence to encourage management to put in place such proper systems and controls.
Of course, if the business has not adopted a form that provides its founder with limited liability, he may wish to take a more hands-on approach in order to ensure that his personal risks are properly managed.
This is the sort of personalized question that really requires competent legal counsel to adequately answer and to assess the appropriate risks. Good hiring practices and effective training (including safety training) can mitigate the risk of harm and in some instances the legal exposure.
Negligence in employment, broadly speaking, means that the employer should have known when it hired or retained an employee that there were good reasons not to hire or not to retain. For example, failure to perform criminal background checks on employees that enter the premises of customers or vendors might be negligence in hiring. Proper HR procedures can sometimes protect against these claims, though in some cases screening procedures might violate state or federal anti-discrimination laws (e.g. discrimination against ex-felons).
Of course, negligent employment is just one method to sue the employer. Agency law is more commonly known, since that theory allows the actions of the employee to be considered the actions of the employer.
I’m not familiar with the sort of legal claims that software companies tend to attract, other than IP-related litigation. Normally these sorts of claims arise when the employee is out delivering the product, so if you offer on-site support services, then I suppose you could see some agency liability if your employee hits a pedestrian or negligence liability if he has a criminal record and then assaults somebody while on the job.
If you find your start-up expanding, then consulting your lawyer on proper hiring and training practices is generally a good idea.
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