Employee-based liability is associated with how you hire your employees, treat them while employed, what they do while they are employed, and firing them. Your potential liability in this area generally include three different sub-categories (1) labor law related, (2) vicarious liability, and (3) unlawful hiring and firing.  This is just a quick over view of these potential weak points of your business.

Labor Law Related

Think about this typical scenario that poses significant risks to many businesses.  It is time to cut costs so you decide to terminate one of your employees. That employee is predictably not too happy about the job loss.  They call an attorney who advises he/she has been misclassified as an exempt employee and should have been paid overtime pay.  The attorney digs more and finds that the employee’s lunch was sometimes interrupted because he/she ate lunch at his/her desk.  Now you have an employee who has a wage claim for thousands of dollars plus thousands in penalties.

The costs of employees are more than just the salary and benefits.  Without proper risk management, employers often find themselves legally vulnerable because of the actions of their employees and potential claims due to labor law violations.

California law in conjunction with Federal labor law imposes very strict minimum labor standards.  The enforcement is fairly simple for current or former employees due to the Division of Labor Standards Enforcement’s (DLSE) easy to use administrative legal system.   Many employees do not even need to hire an attorney to navigate the system.

All it takes is a late final paycheck, mistaken deductions from paychecks, failure to provide proper breaks or meal time, or a miscalculation of overtime to leave you vulnerable to a claim. Many of these violations also lead to penalties that are awarded to the petitioner giving further incentive for ex-employees for even minor deviations.

Another issue that an employer should be fairly familiar with is providing for the health and safety of your employees.  Your attention to area of law may vary depending on the safety risks of your industry.  This also includes the safety of your employees from other employees.

Vicarious Liability

Many businesses do not realize the extent of their potential liability when it comes to employees until it is too late.  You can setup as many protections for your business as you can but you could still be held responsible for the acts of your employees.  The specific legal term is vicarious liability where it states that employers are generally responsible for the negligent acts or omissions by their employees within the scope of their employment.  A common vicarious liability scenarios include vehicular accidents by your employees while working.

Unlawful Hiring and Firing

Most already know that there are severe restrictions and penalties for hiring based on disability, race, gender, and other classes–depending on your state and the size of your business.  This applies when hiring and terminations.  A termination could be unlawful for a number of reasons beyond classic discrimination including retaliation or a breach of an employment contract.