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What Is Vicarious Employer Liability & Why Dentists Need To Know

By August 1, 2023September 7th, 2023Employment Law

In case you missed it, a university in upstate New York is suing its cleaning company for the careless acts of one of its janitors, who unwittingly destroyed $1 million worth of research by unplugging a machine while cleaning. This is a good reminder that as an employer, you could be legally on the hook for something your employee did, even if you personally had NOTHING to do with it. This is a legal concept called vicarious employer liability.

Vicarious liability is a risk in many industries, but the consequences are amplified in small businesses. So, in today’s post, we’ll break down the idea of vicarious liability, how it can affect your dental practice, and the components courts look for in assigning vicarious liability to employers.

Vicarious Liability, Explained

Vicarious liability in employment law describes situations where employers are liable for the actions of their employees “committed within the course of employment”Keith N Hylton, Tort Law: A Modern Perspective (Cambridge: Cambridge University Press, 2016) at 185.. Broken down into parts, vicarious employer liability has 3 main components:

  • There must be an employer-employee relationship.
  • The employee must have committed a tort (i.e., an actionable wrong by deed or omission).
  • The tort or wrongdoing must be connected to or within the scope of the employee’s employment.

While the first two components are relatively straightforward, the third usually gives courts and litigants a lot of headaches.

Whether an actionable wrong could be said to be “within the scope of” someone’s job materializes in two different scenarios:

  1. Authorized wrongful acts

If the employer authorized the actionable wrongdoing or act, then it is within the scope of employment.

  1. Unauthorized wrongful acts

Even if the employer did NOT directly authorize the actionable wrongdoing or act, if it is still so connected to the tasks of the employee’s job, which the employer HAS authorized, it could fall within the scope of employment.

Employers will rarely authorize something harmful to be done on their watch, so the first scenario is not in dispute all too often. But the second scenario is where things get more complicated. In these cases, courts are asked to decide whether an employee’s harmful/illegal act done completely without the employer’s knowledge or involvement is sufficiently connected to their actual job duties that the employer should still be held responsible.

One of the leading cases that illustrates this is Bazley v Curry, 1999 (“Bazley”), which went all the way to the Supreme Court of Canada. In Bazley, the Court set out helpful guidance for assessing whether an act is “connected” enough to the employee’s actual job duties to attract liability for the employer. Part of this guidance was to consider policy goals such as fair compensation for the wronged/injured parties and the deterrence of future harm, taking into account the following principles:

  • The main question to ask is whether liability SHOULD lie against an employer in a given case.
  • Any employer-and-employee enterprise carries certain risks, and if those risks materialize into harm in such a way that there is a significant connection between the risk and the wrong, then blaming the employer may be appropriate.

In cases of unauthorized intentional acts by employees, Bazley stated that courts may also consider additional relevant factors, which could include:

  • any opportunities afforded by the job to the employee to abuse their power;
  • to what extent the wrongful deed may have furthered the employer’s aims;
  • to what extent the act was related to inherent frictions, confrontations or intimacies which may have been part of the job;
  • any power dynamic or imbalances between the employee and the victim; and
  • the vulnerability of potential victims to the wrongful exercise of the employee’s power.

In Bazley, the Court applied the above factors and decided that the employer was liable for the employee’s sexual misconduct, as his wrongful acts were significantly connected to, and fostered by, the opportunities for intimacy and control of the kids in his care afforded to him as part of his job, rather than being a mere ‘accident of time and place’.

Why is Vicarious Liability Important?

Why should vicarious liability be on every dentist employer’s radar? It should be evident from what we saw above that employers often can be blindsided with blame for employees’ misconduct, even if that misconduct had nothing to do with the employer per se. This can add a layer of complexity and concern for employers in that often delicate balancing act of encouraging trusting and tolerant workplaces while ensuring that employers maintain enough disciplinary control over their teams. If employers are not careful, workplace bullying and worker misconduct cases can get out of hand and land the employer in hot water.

For example, in the 2022 Ontario court case of Osmani v Universal Structural Restorations Ltd, 2022, a labourer was subjected to harsh verbal language and insults from his supervisor, which eventually escalated to a punch from the supervisor. The trial judge noted the obvious power imbalance and commented that even if the plaintiff and supervisor appeared to carry on as if they were friends and the plaintiff ‘traded insults’ from time to time, it was not a reciprocal exchange. The judge assigned vicarious liability to the employer corporation for the supervisor’s physical assault, finding that the company did little to investigate complaints of abuse and that this was “not simply an incident where the battery simply took place at [the workplace]“. Their response was lacking in the extreme, as they halfheartedly warned the supervisor to “stop what he was doing, ‘if he was doing’ anything”.

What About Contractors?

So far, we’ve discussed how employers can potentially be on the hook for employees’ misdeeds. You might now wonder if the same principle applies to contractors (and if you’re unsure about the distinction, here’s a blog post to help refresh your memory).

Both courts and tribunals have agreed that vicarious liability usually does not attach to an employer for the actions of their independent contractor. This assumes that the independent contractor is an actual independent contractor (not an employee being passed off as a contractor). However, this does not necessarily mean that contractors can NEVER attract liability for those who engaged them in certain exceptional cases. The classes of worker-and-principal relationships where vicarious liability can apply remain open-ended in Canada.

A notable question that remains to be answered in Canadian jurisprudence (i.e., judge-made law from case decisions) is whether dependent contractors would attract the same treatment as independent contractors. Or will they be treated as employees for the purposes of vicarious liability? As there is currently no instructive case law on the matter, it will be interesting to see if employers will be held vicariously responsible for any acts or omissions of contractors deemed to be ‘dependent’.
As a recap, the category of ‘dependent’ contractors describes workers who sit somewhere in the middle of the contractor-employee spectrum for employment standards purposes and who attract notice entitlements on termination.

Bottom Line

As you can see, being an employer (especially in Ontario) has traps and pitfalls that you may not have considered before, including the possibility of being held legally and financially responsible for something ill-advised that an employee decided to do entirely on their own. Dentists should stay informed and vigilant to ensure they protect themselves in case any team members become literal liabilities. For instance, proactive steps that dentist employers can take include

  • reviewing your office policy manuals;
  • implementing written policies if you don’t have any yet, and
  • ensuring your expectations of employee behaviours are crystal clear.

And, as always, we recommend that you call an experienced employment lawyer to ensure your employment contracts and other documents are up to date. DMC is dedicated to helping dentists understand, assess, and minimize risks associated with being employers. Send us an email or contact any of our lawyers at 416-443-9280 to discuss any concerns you may have or to get your employment questions answered.

The Content of this post is provided for informational purposes only. It is not intended to be legal, financial, tax, or other professional advice of any kind. You are advised to contact DMC (or other counsel) to seek specific legal advice concerning your individual situation.