Unless you've been hibernating in a cave in Alaska, you've heard a number of people talking about tort reform when it comes to reducing the costs of health care. But I wonder if you are aware that as
an entrepreneur you can be held liable for the tort of negligent hiring, which essentially means that you hired the wrong person for the job or didn't use a duty of care in selecting that person. Well, guess what--you and lots of other entrepreneurs are at risk.
What is a tort anyway? Sounds like a dessert I had recently, but it's actually defined by Webster's Dictionary as "a wrongful act (not involving a breach of contract) resulting in an injury, loss, or damage, for which the injured party can bring civil action..." And negligence is one of those wrongful acts. According to Daniel Davidson and Lynn Forsythe in their new book The Entrepreneur's Legal Companion, negligent hiring torts are on the rise. So what's this all about? It's based on the notion that the entrepreneur owes a duty of care to his or her customers to staff the business with the best people possible. So, if your employee acts in a manner that offends the customer, you're responsible because YOU should have done the due diligence to find out that this employee had some character flaws. Of course, the scope and depth of investigation you do depends on the type of job the employee will have and the level of responsibility. If you did do sufficient investigation prior to hiring, then you probably won't be held liable (you'll still have to pay to defend your business, though). Davidson and Forsythe recommend that you follow a few steps to avoid running into this type of tort, and I suggest you take them seriously.
- Get a signed release so you can check for criminal records, mental health records, and credit history.
- Talk to the applicant's prior employers. I can't believe how many entrepreneurs don't do this.
- Hire a firm to do alcohol and drug tests.
- Check the department of motor vehicles about tickets and accidents, especially if they will be driving a company vehicle.
- Keep a written record of your investigation and your interview of the applicant. If you ever face a lawsuit, this will come in handy.
A little care and due diligence on the front end will save you a lot of grief later on.
