- August 1, 2012
- Posted by: Seth Heyman
- Categories: Business Law, Employment Law, Startups
Hiring the right employee is one of the largest challenges faced by a small business owner. Not only are you trusting someone you barely know to handle an aspect of your business, but failing to discover key information regarding a potential employee may be grounds for a negligent hiring lawsuit, in the event your new employee causes harm to someone at the workplace.
What constitutes negligent hiring? A claim for negligent hiring is based on the premise that the employer should have known about aspects of a potential employee’s background that would have indicated that he or she may be dangerous or dishonest. In many states, an employer can be held liable for the actions of an employee, especially if the employee was placed in a position with high public contact. More than 2 million crimes occur in the workplace every year, a fact which underscores the critical importance of conducting thorough background checks prior to hiring. In fact, many states require background checks for persons employed in certain positions, particularly those which involve contact with children.
Statistics have shown that employers lose 72% of all negligent hiring lawsuits. To avoid landing on the wrong side of that percentage, you must undertake reasonable care to uncover any red flags regarding a potential employee’s past prior to hiring them.
Here are some steps you should take to protect yourself and your company from a negligent hiring claim:
- Check every reference provided by a potential employee;
- Carry out adequate and diligent background checks;
- Run a criminal background check and a credit check on potential employees who may be handling money;
- Appoint someone to oversee the hiring process, to ensure that no information can fall through the cracks; and
- Retain documentation supporting your decision to hire, as these are key pieces of evidence should a claim be made.
Although following these steps involves extra time and expense, they are necessary to protect yourself and your business. If an employee winds up injuring someone, and it can be shown that exercising reasonable care would have revealed that the same or a similar incident happened in the past, you could be found liable for negligent hiring.
The bottom line is this: In today’s highly litigious environment, what you don’t know about an employee can hurt you… badly. With the stakes so high, consider consulting an attorney to determine if your current hiring practices meet the “reasonable care” standard.