Realistically, one individual’s actions could potentially impact your entire business. For small misconducts, the effect may be minor. But sometimes, someone’s offense can put the whole business at risk.
Whether it’s a case of misconduct, negligence or even a simple mistake, there is one common question among business leaders: Will the whole company be accountable for one person’s actions?
The answer depends on several factors.
The scope of the person’s employment
The scope of employment is an important concept that helps decide when a business might be at fault for employees’ actions. This is based on a legal principle called respondeat superior which means “let the master answer.”
This makes employers accountable for wrongful acts committed by their employees while they are doing their job. Generally, actions during work hours and at the workplace are within scope, especially if they benefit the employer. However, significant variations for personal reasons might not make the employer responsible.
The employee’s position of authority
Individuals in authority or acting as agents for a company can affect its liability because they represent the business. If their actions are meant to benefit the company, the business might be responsible, even if those actions are wrong.
However, if they act outside their authority or for personal reasons, the business might not be liable.
Whether the employee’s actions are independent
When an individual’s actions are independent, not allowed and outside the scope of their job, the business may not be liable.
For example, if an employee uses company resources for personal reasons without permission and causes harm, the business might not be responsible because the actions were not part of their job duties.
Your business’ preventative measures
If your business does not have enough oversight or controls, it may share responsibility for wrongful acts done by employees. This concept revolves around the idea that businesses are responsible for making sure that employees follow legal and ethical guidelines.
In such cases, your business could be held partially responsible because it did not take reasonable steps to prevent the behavior. Still, this will depend on many other factors, such as whether you could have predicted this behavior and, therefore, prevented it.
Whatever the situation, it is highly advisable to seek legal counsel. An experienced legal team can help navigate your situation and select the best solution possible.