Are huge legal payouts for employee misconduct encouraging employers to cover it up?

[Axulus]

If I hire a sexual abuser, and all his background checks came out clean, and he assaults a customer or two, I am now on the hook for a multimillion dollar settlement.

If someone complains about the employee, I now am extremely disincentivized to turn over the information to law enforcement. If they discover credible evidence, I'll lose millions. In other words, the legal system penalizes me for doing the right thing. It encourages me to hide the evidence and/or rationalize it away as not something serious enough to get law enforcement involved and to perhaps pay hush money instead. This also means the abuser avoids prison and can continue the abuse, creating more victims.

If I was not in responsible for the abuse, why does the legal system penalize me to the tune of millions for each incident of misconduct by the employee?

Obviously, a scenario where the employer had credible evidence of abuse and ignored it and let the employee continued the abuse is one thing. The employer is responsible for the new victims and deserves to be punished. I'm talking about scenarios where the employer is finding out for the first time about credible allegations of abuse.

 

[laughing dog]

If someone complains to the employer about an employee, and the employer does not turn over the information to law enforcement, and it is later discovered that the employer hid the information, wouldn't the legal system penalize the employer even more so?

In other words, turning over the information minimizes the potential penalty in the long -run.

 

[Jolly_Penguin]

If I hire a sexual abuser, and all his background checks came out clean, and he assaults a customer or two, I am now on the hook for a multimillion dollar settlement.

If someone complains about the employee, I now am extremely disincentivized to turn over the information to law enforcement. If they discover credible evidence, I'll lose millions. In other words, the legal system penalizes me for doing the right thing. It encourages me to hide the evidence and/or rationalize it away.

If I was not in any way responsible for the abuse, why does the legal system penalize me to the tune of millions for each incident of misconduct by the employee?

It should come down to how well you screened him, trained him, and oversaw him. If you did a thorough background check and he came out clean, and you didn't ignore any complaints filed with you against him, and fired him immediately, then I don't think you are responsible at all. Just say he wasn't acting in the course of his employment. The reason that doesn't always work is because as a company, you are assumed to have deep pockets, and the guy who did it probably doesn't. That's why lawyers sue everyone involved, and you can bet that they will argue that your company had a culture that encouraged this behaviour, that you ignored complaints, that you could and should have stopped this, etc.

They will also argue that he is your agent and representative of your company, and that you took on full liability for his future actions when hiring him. I personally strongly oppose that argument, as it discourages hiring, but many endorse it.

 

[Axulus]

If someone complains to the employer about an employee, and the employer does not turn over the information to law enforcement, and it is later discovered that the employer hid the information, wouldn't the legal system penalize the employer even more so?

In other words, turning over the information minimizes the potential penalty in the long -run.

It will reduce the long run penalty if the abuse allegations become public and law enforcement gets involved. The employer is hoping that doesn't happen and perhaps rationalizes that the complaints aren't credible enough to worry.

There should be grace given to employers for first time credible complaints reported to law enforcement, where the employer had no reason to suspect any prior wrong doing, and where the employer immediately fires the employee once the evidence is determined to be credible. The employer shouldn't be on the hook in those cases. From what I can tell, even in those scenarios they usually have to pay sizable sums to the victims.

 

[Tom Sawyer]

Ya, it’s sort of like how long jail sentences for murder encourage people to try and cover it up when they kill someone.

The jail terms are the real problem we need to be focusing on.

 

[Axulus]

Ya, it’s sort of like how long jail sentences for murder encourage people to try and cover it up when they kill someone.

The jail terms are the real problem we need to be focusing on.

The difference is you are penalizing the party that would otherwise have little reason to cover it up. It is like saying we'll put you in jail if your roommate killed someone in your house (even if you had nothing to do with it). Yes, the jail is definately a problem there that we should be focusing on.

Your employee abused someone on the job? Be prepared for a million dollar settlement, unless you can successfully prevent law enforcement from getting involved.

 

[Jolly_Penguin]

Ya, it’s sort of like how long jail sentences for murder encourage people to try and cover it up when they kill someone.

The jail terms are the real problem we need to be focusing on.

The difference is you are penalizing the party that would otherwise have little reason to cover it up. It is like saying we'll put you in jail if your roommate killed someone in your house (even if you had nothing to do with it).

More like saying we'll put the landlord in jail a renter killed someone.

 

[Sarpedon]

Except there's a legal requirement for an employer to 'supervise' their employees that doesn't exist for a landlord.

I love how flippantly the OP says 'assaults a customer or two.' If the employer lets them get away with the first one in order to commit the second, they obviously need to be sued.

 

[Axulus]

Except there's a legal requirement for an employer to 'supervise' their employees that doesn't exist for a landlord.

I love how flippantly the OP says 'assaults a customer or two.' If the employer lets them get away with the first one in order to commit the second, they obviously need to be sued.

The employer often doesn't find out until the employee has abused multiple people. What I am saying is that the employer shouldn't be liable at this point if they took reasonable steps, such as a background check and immediately took complaints seriously and turned them over to law enforcement for criminal allegations. Yes, if an employer ignores criminal allegations and allows the employee to continue committing crimes, I agree they should pay damages.

 

[Tom Sawyer]

So, if someone uses their position at a bank to funnel money for terrorists, the bank shouldn’t be liable for that and every time it happens, the executives are OK and it’s just the one mid level who gets in trouble?

The fines the government levies for financing terrorists are the real problem?

 

[Sarpedon]

The liability exists to make the employers take the trouble to try. History shows that employers will cut any corner they are allowed to to save a buck. If there weren't huge payouts, there wouldn't be background checks.

And for the employer who genuinely couldn't have stopped the first offense, and did everything right, well that's what insurance is for.

 

[Axulus]

So, if someone uses their position at a bank to funnel money for terrorists, the bank shouldn’t be liable for that and every time it happens, the executives are OK and it’s just the one mid level who gets in trouble?

If the bank had reasonable systems to detect and prevent that, did a background check on the employee, and immediately reported it to law enforcement upon discovery, then the only people who should get in trouble are the person who sent the money to the bank and the employee who helped. Why should anyone else get penalized?

If the bank has multiple violations, then their systems are probably inadequate to prevent and detect, or they have a lax culture to enforce it. I could see requiring a payout at that point to be reasonable.

 

[Tom Sawyer]

So, if someone uses their position at a bank to funnel money for terrorists, the bank shouldn’t be liable for that and every time it happens, the executives are OK and it’s just the one mid level who gets in trouble?

If the bank had reasonable systems to prevent that, and immediately reported it to law enforcement upon discovery, then the only people who should get in trouble are the person who sent the money to the bank and the employee who knew about it

So, I assume you also think that if those mid level people do well instead of committing crimes, they should also get all the bonuses and stuff which result from their work instead of passing the profits up the chain to the executives who weren’t involved, or is it only when bad things happen that upper management should be kept separate from the results?

 

[Jolly_Penguin]

The liability exists to make the employers take the trouble to try.

But if they do try, in fact if they go above and beyond in trying, but still fail to prevent it and an employee does this nonetheless, do you hold the company responsible or just the employee?

 

[Axulus]

So, if someone uses their position at a bank to funnel money for terrorists, the bank shouldn’t be liable for that and every time it happens, the executives are OK and it’s just the one mid level who gets in trouble?

If the bank had reasonable systems to prevent that, and immediately reported it to law enforcement upon discovery, then the only people who should get in trouble are the person who sent the money to the bank and the employee who knew about it

So, I assume you also think that if those mid level people do well instead of committing crimes, they should also get all the bonuses and stuff which result from their work instead of passing the profits up the chain to the executives who weren’t involved, or is it only when bad things happen that upper management should be kept separate from the results?

People should only be legally responsible for criminal activity they played a role in allowing or doing themselves. If an employer didn't allow something, took reasonable steps to detect and prevent, and immediately reported anything credible to law enforcement, they should not be penalized. Right now, they have a huge incentive to keep such conduct hidden from law enforcement due to the penalties. It's a matter of priorities: do you want criminals exposed by employers and the criminal penalized or do you want their conduct to be covered up by the employer?

 

[Tom Sawyer]

The liability exists to make the employers take the trouble to try.

But if they do try, in fact if they go above and beyond in trying, but still fail to prevent it and an employee does this nonetheless, do you hold the company responsible or just the employee?

Yes, if was acting in a role for the company they are liable. It’s the same as if he gives a really good sales presentation and moves a lot more product than the management expected. Their cut of the profits doesn’t stop at where they estimated him at. He did something good in his job and the company as a whole benefitted. Similarly, if he does something bad, the company should suffer.

 

[Jolly_Penguin]

The liability exists to make the employers take the trouble to try.

But if they do try, in fact if they go above and beyond in trying, but still fail to prevent it and an employee does this nonetheless, do you hold the company responsible or just the employee?

Yes, if was acting in a role for the company they are liable. It’s the same as if he gives a really good sales presentation and moves a lot more product than the management expected. Their cut of the profits doesn’t stop at where they estimated him at. He did something good in his job and the company as a whole benefitted. Similarly, if he does something bad, the company should suffer.

I think you are comparing apples to oranges. Assaulting someone isn't the mere losing of some money or poor productivity in their course of employment. The argument will be that he was acting outside his role for the company, and that the company didn't instruct and doesn't endorse the assault. It isn't an ooops while doing business. It is an intentional act of aggression not condoned by the employer.

 

[Axulus]

As a side note, the legal liability and responsibility of having an employee is partly responsible for the boom in hiring people from temp agencies. Why would an employer pay 3x the amount a temp worker receives to the agency and keep the temp for many months? It must be cheaper than just hiring an employee directly. That's money out of the pockets of employees.

Doctors and CFOs are now acting as temp workers — and the industry is booming

https://www.google.com/amp/s/amp.businessinsider.com/temp-industry-is-at-an-all-time-high-2016-6

 

[Sarpedon]

Like I said, that is what insurance is for: Unpredictable and unpreventable losses.

 

[Jolly_Penguin]

As a side note, the legal liability and responsibility of having an employee is partly responsible for the boom in hiring people from temp agencies. Why would an employer pay 3x the amount a temp worker receives to the agency and keep the temp for many months? It must be cheaper than just hiring an employee directly. That's money out of the pockets of employees.

Doctors and CFOs are now acting as temp workers — and the industry is booming

https://www.google.com/amp/s/amp.businessinsider.com/temp-industry-is-at-an-all-time-high-2016-6

A bigger reason for this is avoiding unions.