The Legal Framework
When a customer seeks to hold an employee individually liable, it is usually under a theory that the employee acted outside the course and scope of their employment, or that the employee acted with an independent intent to harm the plaintiff separately from the employer. This presents a different scenario than holding the employer company liable in the first instance. The legal principles that surround when the plaintiff can and cannot sue the individual employee rather than or in addition to the company all have to do with concepts of vicarious liability and respondeat superior.
Under the doctrine of vicarious liability, an employer can be held responsible for harm caused by the wrongful acts of its employees. The wrongful actions of the employee are imputed to the employer. A key legal concept underlying vicarious liability is that although the employer did nothing inherently "wrong," it is responsible to its customers for the manner in which it conducted its business . An employer may be relieved of vicarious liability to the extent that its employee acts outside the course and scope of employment, which means in effect that the employer was not in charge of what its employee was doing. There is no liability for the employer where the employee is completely on a frolic and detour unrelated to his or her job duties. An essential element of vicarious liability is the employee’s relationship to the employer. Factors to consider include: Respondeat superior is simply a legal term referring to the employer’s responsibility for injuries and damages that its employee wrongfully causes. The policy and logic behind vicarious liability is that the employer is in a more effective position to protect customers and third parties from the misconduct of its employees. In most cases, vicarious liability does not extend to agents and independent contractors who are not employees of the company.
When You Can Sue Directly Against the Individual Employee
While an employee is generally protected from direct lawsuits by a customer for actions arising solely from their employment, there are certain circumstances in which this is not so. The most significant of these is where the employee himself has personally committed a tort or breach of contract with the customer.
New York courts have held where an employee commits a personal tort, the employer can assert no defense. An example of this is theft which, based on the allegations of the Complaint, may have been a "tort or breach of contract the employee committed against plaintiff personally." (Dunn v. Metzger Unternehmensberatung, 18 AD 3d 1024 (3d Dept 2005).) Thus if a customer sued an employee individually over allegations that the employee embezzled money from the customer, the suit would likely be held to be legally permissible as to the employee, but impermissible as to the employer.
Even where a customer sues a violating employee for a tort or breach of representation or warranty in the service of their employment duties, the employer may still be held liable if the employment relationship made the breach possible — such as where the employee was supposed to be handling food or cash.
In Dunn, the Court said "[c]ontrary to [the employer’s] contention, the fact that the individual defendant acted in the scope of her employment does not exonerate it from liability for a tort or a breach of a representation or warranty that the employee committed personally." Thus, if a security guard stole from a customer while working for the employer, the security guard (Dunn) could be sued individually.
Liability Between the Employee and Business
Suing an employee is fundamentally different from suing the employer or the corporation. When a customer has the thought of filing a lawsuit against an employee, it’s usually brought on by the poor treatment or unprofessional behavior of the employee toward the customer. This is not same as a lawsuit against the employer based on an allegation of negligence. A personal injury claim against an employee will almost always be much more difficult to prove than a claim against the company itself.
The issue of primary importance is whether the employee was acting as an agent of the corporation at the time of the occurrence. In general, the employer will be liable for the acts or omissions of its employee in carrying out the business of the employer, provided the employee did not act so far outside the scope of employment as to disqualify the employer from liability. Once a customer can show that the employee was acting in connection with his or her job, it is much easier to hold the employer liable.
An exception to this general rule is in situations where an employee has a special duty of care to a customer. For example, attorneys owe a duty of care and confidentiality to clients, account representatives have a duty to protect the financial information of their account holders, etc. Similar duties are spelled out for doctors, nurses, teachers, and many other occupations. In some of these cases, the employee will be liable individually along with the employer.
Effects of Suing the Employee Directly
The first thing that happens if you prevail in a lawsuit against a waitress or other employee is that you have a money judgment against her. If she refuses to pay, you have to collect. If she has no money or property, it may be very hard to collect. If she has any money, you can garnish her paycheck (in most states) to the extent your state allows wage garnishment. In California, for example, you can only garnish 25 percent of an employee’s paycheck or his/her entire disposable earnings for a week if the disposable amount is less than $54.00.
It can be hard to find a discharged employee to serve with a lesser complaint, so it may be hard to locate her and therefor hard to get a money judgment against her. If you cannot collect the judgment, it won’t do you much good.
If you are able to collect, the employee has a big problem if the employer refuses to indemnify her (as many employers do). You can then have the county sheriff seize certain property, such as bank accounts, which may have been set up by the employer so that there is no "evasion" of the judgment. The employer may pay the judgment on behalf of the employee (which satisfies her, but does not help you much, and presumably she will seek indemnity from the employer).
A $25,000 judgment maybe be nominal given the risk and hassle of getting it. It may not be worth off-setting easily obtained money damages you would have gotten from a direct suit against the restaurant or the owner or whatever. But the law in this area is convoluted, so talk to a lawyer as to the odds, your particular chances of collecting from a wage garnish or otherwise, and the overall costs of pursuing the case.
Also, will the $25,000 judgment lead to serious repercussions for the waitress (or other employee)? Maybe. It may lead to her firing, depending on whether or not the employer will indemnify her (if the employer refuses to indemnify her there may be indirect consequences). That still leaves you with a customer with a serious problem seeking indemnity from the employer. Bottom line, even if you win the case, the waitress could still have a serious problem and sue the employer.
Legal Guidance and Next Steps
A customer thinking about suing an employee should first seek legal advice. Once legal advice is received, the customer must evaluate the strength of the case against the employee and whether there is enough evidence to prove it during trial. It is important to consider whether there is another source of recovery. For example, is the business or restaurant in a better financial position to satisfy any judgment? If so, any lawsuit against an employee might be better suited against the business and not the employee.
The next step is preparation . A plaintiff must be prepared before filing a lawsuit. It is critical to gather evidence for the lawsuit prior to commencing the action. For example, if the case involves personal injury, gather all relevant medical records and bills. Is the plaintiff’s medical condition healed, permanent or does it require future medical care? If the action involves property damage, gather estimates and have any damaged property available for inspection. Ultimately, discovery requests will be issued to support the claims. It is therefore important to have the evidence you plan to rely on ready for discovery.
Examples and Precedents
Over the years, various cases have helped to shape how the question of whether a customer can sue an employee individually is approached legally. For instance, in 2010, in the case of a customer who sued a server for a glass in the eye following a restaurant slip and fall incident, the Georgia Court of Appeals ruled that she could not pursue her lawsuit against the individual employee even after finding the restaurant liable. The Court found that the doctrine of "respondeat superior", which assigns vicarious liability to businesses – making them responsible for their employees’ actions – does not apply on an individual basis when considering the liability of employees. Stated simply, the Court concluded that if an employee is released from liability, then an employer would also be released from liability for the employee’s actions.
In another example, a 2011 Mississippi Court of Appeals case involving a fast food restaurant in which a patron was injured as he tried to step through the drive-thru window holding his food, also supported this concept. The Court concluded that even when the restaurant’s negligent instruction to leave the drive-through window open for an extended period was not contested, the patron could not sue the employee who was negligent.
In contrast to these cases, in 2013, the New Jersey Supreme Court held a customer could sue an individual employee, when deciding a New Jersey negligence law under the state’s Workers Compensation Law (involving the blood transfusion of a surgeon who contracted Hepatitis C, from a nurse who had already been terminated over her diagnosis). The Court provided a detailed analysis of various legal precedents that confirmed its findings. The Court found that because it was a matter of general negligence, the Hospital sued and not the nurse, the Court held that the employee could be sued individually by the customer.
From these examples, there are clear conclusions that can be drawn regarding liability and customer cases. When courts are asked to determine whether a customer can sue an individual employee, they parse complex legal issues and precedent pertaining to vicarious liability and respondeat superior, while also closely examining the relationship between the business entity and the individual employee being sued. The subsequent outcomes appear to hinge on the extent of the liability being considered and what degree of separation is established, in the case of customers suing employees. Further, the distinctions in liability may be determined based on the particulars of each circumstance. For example, you will get a different answer when we talk about cleaners, inspectors, supervisors or waiters, due to varying duties.
Preventative Strategies
For businesses, the best course of action is to take preventive measures to avoid being sued by customers, as these suits can be costly and damaging to reputation. While the above discussion provides legal best practices, it is recommended that businesses take the following steps in training and in the development of clear organizational policies to ensure low risk of personal suits against employees. As discussed in the relevant law section (above), all businesses should be familiar with the doctrine of respondeat superior, and how their jurisdiction interprets it. Thus, regardless of jurisdiction, a business should train its employees on how to interact with customers and avoid altercations. Employees should be well versed in de-escalation tactics and proper responses to difficult situations. However , employers should not go so far as to train their employees to let customers get away with unlawful behavior; rather, training should focus on how to handle situations in accordance with company policies, which may require contacting the authorities for unlawful behavior. Make sure employees are clear on their individual roles, and review these rules and responsibilities regularly. In addition to training, it is worthwhile to put in place strict company policies regarding customer interactions. Customers should be required to acknowledge receipt and understanding of these policies and the consequences of any non-compliance. All employees should receive a copy of these policies as well as refresher updates when policies undergo changes.
