Protecting Yourself From Rogues and Rascals In Your Employ

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Protecting Yourself From Rogues and Rascals
In Your Employ
When Vice-Principals, Employees, Agents and
Supervisors Go Astray

• Kevin Sadler
• kevin.sadler_at_bakerbotts.com512.322.2500

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Employer Liability

• Four Main Areas
• Vicarious Liability
• Vice-Principal Liability
• Negligent Hiring, Training, Retention, and
  Supervision
• Quid Pro Quo -- Strict Liability for Supervisor's
  Sexual Harassment Conduct

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Vicarious Liability

• Employer may be held liable for its employee's
  tortuous acts if the act is
• Within the scope of the employee's actual or
  apparent authority
• In furtherance of the employer's business, and
• For the accomplishment of the object for which
  the employee was employed
• In other words, an employer is liable if the act
  fell
• "Within the course and scope of employment"

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Vicarious Liability

• Course and Scope
• Conduct must be of the same general nature as
  that authorized or incidental to the conduct
  authorized
• Employer need not approve or authorize
• In furtherance of employer's business
• Turns on employer's ability to control employee
• No Liability where employee's act furthers
  self-interest
• Assault based on personal animosity
• Personal gratification

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Vice-Principal Liability

• What is it?
• The corporation or employer is liable because the
  actions taken by a vice-principal of a
  corporation are the acts of the corporation
  itself
• Vice-principal's acts or omissions must
• Bear a relation to,
• or be referable to,
• or further the employer's business

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Vice-Principal Theory

• Who are vice-principals?
• corporate officers
• those who have authority to hire, fire, and
  direct employees
• those engaged in the performance of non-delegable
  or absolute duties
• those who manage the whole or a department or
  division of business
• In other words . . .
• a vice-principal is a person who has the
  authority to hire, discharge, and direct
  employees of the corporation or who has the
  authority to manage the entire corporation or
  division of its business.

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Vice-Principal Theory - Punitive Damages

• The potential for punitive damages is what makes
  the vice-principal theory attractive to
  plaintiffs and their lawyers
• the employer authorized the doing and the manner
  of the act
• the employee was unfit and the employer was
  reckless in employing him,
• the employee was employed in a managerial
  capacity and was acting in the scope of
  employment,
• the employer ratified or approved the act

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Vice-Principal Liability

• Cases where punitive damages imposed
• Purvis v. Prattco, Inc., 595 S.W.2d 103 (Tex.
  1980) Hotel ejection case. employer liable for
  the acts of its manager who ejected a family from
  a hotel
• Wal-Mart v. Itz, 21 S.W.3d 456 (Tex.
  App.--Austin, 2000) Wal-Mart liable for its
  manager's assault of a sexual nature when he
  "ordered the plaintiff to a back room under a
  business pretext"
• Shearson Lehman Hutton, Inc. v. Tucker, 806
  S.W.2d 914 (Tex. App.--Corpus Christi 1991, writ
  dim'd w.o.j) employer liable for slander when
  senior vice-president was considered a
  vice-principal and authorized to make statements
  about a former employee.

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Negligent Hiring, Training, Retention, and
Supervision

• What is it?
• Arises directly from the employer's conduct
• Plaintiff must show that
• Employer owed her a duty
• Employer breached that duty
• Breach proximately caused her damages

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Negligent Hiring, Training, Retention, and
Supervision

• Duty
• Duty arises because of the special relationship
  that exists between the parties.
• E.g., between the employer and the employee
• Employer-employee relationship creates a duty to
  a third party only if the third party's harm is
  the result of the wrongdoer's employment.
• No Duty if
• Individual bears no relation to the employer's
  business, OR
• Injury cannot be traced back to the fact of the
  wrongdoer's employment

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Negligent Hiring, Training, Retention, and
Supervision

• FORESEEABILITY
• Plaintiff must establish that his injuries were
  brought about by the reason of the employment of
  the incompetent employee
• Without this connection, "an employer would
  essentially be an insurer of the safety of every
  person who happens to come into contact with his
  employee simply because of his status as an
  employee."

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Negligent Hiring, Training, Retention, and
Supervision

• Loram Maintenance of Way, Inc. v. Ianni
• Facts A crew member for Loram Maintenance was
  strung out on crystal methamphetamines, left the
  job site and shot and injured a police officer
  that approached him while he had an argument with
  his wife
• 800,000 actual damages
• 500,000 punitive damages

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Negligent Hiring, Training, Retention, and
Supervision

• El Paso Court of Appeals upheld judgment because
• supervisors knew of rogue employee's pervasive
  drug use (and rest of crew's)
• prior incident where field clerk had told
  employee to go to next job site after he attacked
  another crew member's wife was "some asserted
  control" over employee

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Supervisors Sexual Harassment

• Strict Liability -- Quid Pro Quo
• Something for something
• Job benefit or detriment is conditioned on
  submission to sexual advances
• Hostile Work Environment
• Conduct that alters the conditions of employment
  and creates an intimidating or offensive
  environment

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The Rules

• Supervisors
• supervisor harassment tangible detriment
• AUTOMATIC LIABILITY

supervisor no tangible good victim fails
to harassment detriment policy utilize
policy
NO LIABILITY
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Reasonable Care to Prevent and Correct Harassment

• What is reasonable care?
• 1. Effective and effectual anti-harassment
  policy
• 2. Prompt, thorough investigation
• 3. Specific, tangible action designed to stop
  harassment
• What is not reasonable care?
• 1. Failing to adopt/enforce anti-harassment
  policy
• 2. Failing to investigate timely, or at all
• 3. No record of action

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Practical Tips To Avoid/Minimize Liability

• Communication and Training
• Appropriate Complaint and Investigation
  Procedures
• Open Door Policy with Human resources
• Limit Authority of Vice-Principals, Supervisors,
  and Managers

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Communication and Training

• Make sure employees aware of company policies
• Periodic Reminder Training
• Make sure that supervisors and managers are aware
  and routinely reminded of their
• obligations under the law
• company policies regarding harassment,
  discipline, and investigation
• Train management about
• their authority
• how to deal appropriately with employees

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Investigation and Corrective Action

• When employee reports misconduct of a fellow
  employee or supervisor, employer MUST
• Investigate claim
• Take appropriate action such as
• counseling, sensitivity training
• corrective measures, disciplinary action
• punishment
• demotion
• termination
• Not appropriate to
• ignore
• suggest employee's talk it out
• respond that "boys will be boys" or "that's just
  Bob"

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Open Door Policy

• Make sure
• Human Resources has open door policy for
  employees
• Have more than one channel for employee's to
  report misconduct or lodge complaints
• Treat complaints against vice-principals,
  supervisors, managers, and other high-ranking
  officials just as seriously as those against
  "rank and file" employees

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Limit Authority

• Avoid granting too much authority to supervisors
• Limit supervisor's authority to make ultimate
  employment decisions, i.e., hiring, firing,
  without
• prior approval from higher management
• advice and consent from Human Resources
• Managers and Supervisors should be subject to
  same disciplinary procedures as other employees

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Supervisors Should Know

• Held to a higher standard
• Discipline for ignoring harassment
• Possible personal liability for ignoring
  harassment
• Third party harassment
• Must report all complaints
• Duty to investigate if you have knowledge or
  should have knowledge that harassment may be
  taking place
• No retaliation
• Document everything
• Confidentiality

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www.bakerbotts.com
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Kevin Sadler kevin.sadler_at_bakerbotts.com512.322.2
500
www.bakerbotts.com