Employers rely on their employees to carry out their day-to-day tasks and to properly represent the needs of their employers. Unfortunately, at times those acts result in legal liability to third parties. When employees subject their employer to legal liability to third parties, courts use the doctrines of Respondeat Superior or vicarious liability to make the employer responsible for the actions of the employees. The Indiana Supreme Court and the Indiana Court of Appeals have recently issued several decisions concerning these doctrines. Based on these decisions, employers must be even more vigilant in training and preventing their employees from committing acts that may be injurious to their patients, clients, or customers.
The general rule for determining whether vicarious liability will be imposed upon an employer is where the employee has inflicted some form of harm while acting within the scope of employment and the employer would not otherwise be liable for its own acts. The critical analysis for a Court is generally what are acts within the scope of employment. To be within the scope of employment, an employee’s acts must either:
(1) be incidental to the conduct authorized by the employer, or (2) further the employer’s business to an appreciable extent.
The Indiana Supreme Court in Cox v. Evansville, recently expounded that “acts that may be incidental to authorized conduct” include acts that “naturally or predictably arise” from activities the employer has delegated or authorized the employee to do. This means, depending on the circumstances, that acts the employer expressly forbids, or that violate the employer’s rules, orders or instructions, may still be found to be acts that are within the scope of employment.
An example of this expansion is where an employee of a healthcare provider texts her husband regarding a patient who was visiting the office. The employee has access to the patient’s medical records during her employment, but the employer requires that these records be kept confidential. Because some of the employee’s acts were authorized, the Court of Appeals found it was for the jury to determine whether the employee texting her husband, contrary to her training and agreement, was within her scope of employment. The critical point here being the healthcare provider explicitly trained its employees not to divulge medical information, and required its employees to sign an agreement that they would not engage in this type of behavior.
Interestingly, a similar fact pattern was presented to a different panel of the Indiana Court of Appeals, who found the decision in Cox should be limited to police employment.
Therefore, until the Indiana Supreme Court provides further guidance, employers must be vigilant in preventing their employees from committing injurious acts. In addition to training employees and having employees sign agreements prohibiting them from committing injurious acts, employers may need to take other steps to protect themselves from liability. This may come in the form of strict rules regarding cell phone use, more narrowly tailoring access to confidential information, and perhaps even more careful monitoring of employees. Especially during these unprecedented times of COVID-19 and the vast growth of remote work, employers need to consider what expanded risks of liability they have for their employees’ actions.