Vicarious liability, sometimes called imputed liability, is a legal concept that extends responsibility for one person’s actions to another person.

This other person does not have to be directly responsible for the incident — they only need to have a business, organizational or family connection to the person who committed the act.

Examples of vicarious liability include:

  • When an employer is held accountable for the actions of one of its employees
  • When individual business partners are held liable for the actions of fellow partners
  • When parents are considered responsible for the negligent acts of their children or other people’s children while under their supervision
  • When directors and officers are held accountable for acts committed while they were performing duties on behalf of a corporation

Why is vicarious liability applied?

The concept of vicarious liability rests on the legal doctrine called “respondeat superior,” a Latin term meaning “let the master answer.” Essentially, it shifts responsibility for negligence, libel, wrongful conviction and other civil complaints to the individual or organization that is assumed to be senior in the relationship.

The primary reason for invoking vicarious liability in a lawsuit or insurance claim is to shift the burden of payment to the party who is considered most likely able to cover the legal expenses, medical costs, or settlements or judgments that result.

How is vicarious liability justified?

Business owners, parents and organizational leaders are given the assumed right to control the actions of those they supervise. These leaders have a legal duty to maintain a safe environment and train or educate on proper behavior and skills.

Because of this presumed control, they can be considered at fault if the person under their supervision fails to perform their duties appropriately, damages another individual’s property or causes physical harm to someone else.

With regard to businesses, this responsibility is in effect only when the employee is on the clock and working within their scope of employment.

This can be a somewhat disputable definition. For example, an employee can be involved in an accident on their way to work or at an after-hours social event. Therefore, the courts have developed more definitive guidelines to clarify vicarious liability.

  • Most states exclude incidents that occur during an employee’s commute to or from work. Exceptions may be made when an employee’s personal car is used as part of their job, such as for on-site client visits, or if an accident occurs when an employee’s car is being used for a work-related errand.
  • If a company-sponsored social event is mandatory or the employer benefits from the employee’s attendance, the employer could be held vicariously liable for a related incident. An example might be an employee who is involved in an incident at a client networking event, especially if alcohol was served.
  • If an employee is involved in an incident while completing a personal errand but that personal errand was carried out during a job-assigned task, the case will be reviewed to see how it relates to a legal concept called “frolic and detour.”
    • A frolic is a major departure in either time or distance traveled from the assigned work responsibility.
    • A detour is only a minor departure.
    • The assignment of vicarious liability depends on when the incident occurred — during a frolic, which is considered off the clock, or a detour, which is considered on the clock.
  • Any time a business-owned vehicle is used, whether by an employee or a nonemployee, vicarious liability is typically admissible in a claim or lawsuit.

What about independent contractors?

Typically, independent contractors are held solely liable for their own negligent acts. However, there are some exceptions:

  • If the contractor chosen is considered incompetent or not suitable for the task, the contracting organization could be sued based on negligent hiring.
  • If the contracted work is inherently dangerous, the employer retains primary responsibility.
  • If the business passes responsibilities it isn’t legally able to delegate to a contractor, it can be held liable. This is most often related to workplace safety issues but may also include other issues of supervision and leadership.

Protecting yourself and your organization from vicarious liability

While you may be unable to fully control the actions of others, you can control how you protect your assets. An agent or broker who specializes in liability insurance can help you address your risk of vicarious liability with a range of insurance options.

These may include small-business liability policies, general liability coverage, commercial auto, professional liability (errors and omissions), workers’ compensation, directors and officers insurance, and other policies that can help with any legal fees or expenses related to a claim that invokes your vicarious liability.

When appropriately designed, these same policies can also protect your employees and other related individuals.

Blue Ridge Risk Partners is a top 75 independent insurance agency in the United States. With 22 offices and counting throughout Maryland, Pennsylvania, and West Virginia and access to hundreds of carriers, we are able to meet your unique insurance needs.