I got to watch the guy, too?

A few months back, I posted some information about the liability you guys can incur if you hire someone you shouldn't or who is unfit for the job. The cause of action was called negligent hiring and it put you employers in the hot seat for hiring child molesters as baby sitters or known sexual harassers to run the office.

I have more good news for you. Your obligations don't end there. As an employer, you have to properly supervise your employees. There is a cause of action for negligent supervision that was first recognized about 50 years ago that allowed plaintiffs to sue an employer and the negligent employee. It wasn't used all that much, but it recent years plaintiffs (particularly those alleging claims of employment discrimination) have latched on to it as another theory to get to the employer.

Essentially, as the employer, you have a continuing duty to ensure that your employees remain fit for the position they were hired to fill. If you become aware that they are acted outside the scope of the law or the course of their employment and doing these that subject you or your business to liability, you have a duty to do something about it. If you don't.....you know how that story ends.

So, now we come to the part where I ask "So, what am I talking about?." You run ABC, Inc. You hire John to run the accounting department at your office. A few months into the job, customers start to complain that their invoices are overstated and you notice that the money doesn't seem to flow in quite like it used to. But, instead of checking in with John, you figure it's an economic cycle, things will turn around and it's just best to let things run their course.

Bad choice. Turns out, John has been overstating customer invoices and threatening them if they don't pay the overstated amount. Worse, John has fraudulently induced customers to buy many more of your widgets in exchange for all sorts of crazy promises.

In addition to the fact that John is an extortionist and civilly liable for fraud, guess who could get tagged for failing to properly keep an eye on John?