Background Checks and References

An employer’s obligations in conducting background checks and providing references for former employees is an extremely nuanced area of employment law and could expose an employer to significant liability. As explained below, conducting background checks/reference checks is critical for employers to defend themselves from negligent hiring/supervision claims. However, when conducting background checks employers must also be careful not to invade the employee’s privacy rights, and be aware that many background checks could fall under the Fair Credit Reporting Act (FCRA) (and the California equivalent of this Federal law), which require the employer to comply with additional requirements. We will be providing a series of posts related to these issues over the next few weeks. This first post focuses on employers’ potential liability under a negligent hiring or supervision cause of action.

Negligent Supervision - Standard

An employee who has been harassed or discriminated against, or otherwise injured by the acts of another employee, may attempt to sue the employer for negligence in supervision of the other employee.  For example, an employee may state a cause of action against an employer in retaining an employee who allegedly sexually harassed the plaintiff.  (Hart v. Nat'l Mortgage & Land Co., 189 Cal.App.3d 1420, 1426 (1987)).  Similarly, third-parties who do not work for the employer, but who have been injured by an employer’s agent may also allege a negligence claim against an employer.

In order to establish a cause of action for negligent supervision, a plaintiff must prove: (1) the existence of a legal duty of employer to employee to use due care; (2) that the defendant-employer breached that duty; (3) any breach proximately caused plaintiff's damages; and (4) damages. 

An employer's duty, is breached only when the employer knows, or should know, facts which would warn a reasonable person that the employee presents an undue risk of harm to third persons in light of the particular work to be performed. As one court stated, the “cornerstone of a negligent hiring theory is the risk that the employee will act in a certain way and the employee does act in that way.” 

Examples

A court held that a student sexually molested by a teacher could pursue claim against the teacher's employer (which was the school district) for negligent hiring and supervision, if the persons responsible for hiring and/or supervising teachers knew or should have known of teacher's prior sexual misconduct towards students, and that the teacher posed reasonable foreseeable risk of harm to students under his supervision. 

In another case, a teacher admitted on his employment application that he had been arrested for public indecency and had a bench warrant out for his arrest. The teacher kidnapped and assaulted several children at the school, and the children’s representatives prevailed against the school under a negligent hiring claim because the school failed to investigate the teacher’s disclosures about his background and hired him anyway. 

General Rule For Employers

It is critical that employers take reasonable steps to conduct appropriate background checks on its employees to ensure that the employee does not present a knowable risk to other employees or third-parties. Furthermore, if an employer knows or reasonably should know that an employee poses a risk to other employees or third parties, an employer needs to take appropriate precautions, which could include terminating the employee, in order to protect other employees or third parties. Next time we will discuss the balance of obtaining appropriate information during the background check without violating an employee’s privacy rights. 

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Dan Schwartz - November 4, 2007 6:05 PM

Very interesting post and I appreciate your view of the negligent hiring standard. I looked at this issue from a different perspective a few weeks ago.
http://www.ctemploymentlawblog.com/2007/09/articles/hr-issues/background-checks-and-the-hiring-process/

I do think that the negligent hiring cases are more the exception to the rule. Typically, they are the "worse case" examples, such as a criminal act. That's not to minimize their importance and the concerns they raise, but I also don't think that the negligent hiring claim is the main reason for doing the checks.

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