Chapter 2, Legal Tips and Traps
Negligent hiring is the failure to properly screen employees, resulting in hiring someone with a history of violence or crime – who commits a violent or criminal act. It normally refers to an employer’s obligation to not hire an applicant that they know or should have known was likely to engage in criminal conduct against subject employees or even third parties.
Negligent retention is retaining an employee after the employer becomes aware of the employee’s unsuitability (due to a history of violent or criminal acts), thereby failing to act on that knowledge. Either way, the company can be sued if the employer did not do an adequate background check on the new hire, or doesn’t act when the employee manifests the unsuitable characteristics and harms another.
Negligent hiring and retention is a deadly weapon in the arsenal of plaintiff lawyers seeking recovery for their clients. When a lawyer prepares a lawsuit, every possible gun in that arsenal is brought out, fully primed and loaded. In case one doesn’t hit the target and do the most damage, maybe another one will. It is called alternative pleading and it is done all of the time.
In cases when lawyers are trying to reach into the deep pockets of businesses and their insurers, this course of action is like manna falling from heaven, providing outrageous judgments in states which allow punitive damages. Some examples:
~A furniture company paid $2.5 million for negligent hiring and retention of a deliveryman who attacked a customer in her home.
~An employee with a criminal record sexually assaulted a child; $1.75 million was awarded for negligent hiring and retention.
~A nursing home was found liable for $235,000 for negligent hiring of an unlicensed nurse with 56 prior criminal convictions, who assaulted an 80 year old visitor.
~A twelve million dollar settlement was awarded in negligent hiring, training and supervision suit. The suit alleged an armored truck company did not adequately investigate its employees’ past work records and did not provide adequate driving training.
~An employer settled a suit for $2.5 million, seeking to hold it liable for negligent hiring and entrustment of an intoxicated security guard. The guard had an on-duty traffic accident in a company car which killed him and another motorist.
~A store customer detained by a security guard as a suspected shoplifter was injured while being restrained and was awarded $10 million in damages in a suit against the store.
Over 78% of our business contacts or customers had originally NEVER heardof negligent hiring. Most small to medium sized business owners who had heard about it genuinely believed that it could only affect big corporations. Yet per the American Data Bank:
~45% of all applicants either have a criminal record, bad driving record, a workers compensation claim or a bad credit history.
~95% of all companies in the U. S. are victims of theft, and yet only 10% ever discover it.
~Estimates of fraud committed by employees cost U.S. companies approximately $20 billion annually. Workplace theft tops out at more than $120 billion annually.
~30% of all business failures are caused by employee theft.
Plaintiff lawyers revel in any new development that enable large judgments meaning larger fees. They are paid on a contingency basis, receiving a percentage of the amount recovered – sometimes up to 50% of the gross recovery. The attorney fronts all client’s expenses (many times all medical, even paying for surgery and support of the client) while the case is being prepared, litigated and appealed. He or she has much riding on winning, and will take every opportunity to insure a win and therefore return of costs.
Being sued can be avoided. The following discussion and later chapters provide proven tips to help you minimize the liabilities of being caught in a negligent hiring case. Lawyers discern no difference between big and small companies – it is the evidence of a negligent hiring case that attracts them, no matter the size of your company.