When an employee causes damage or loss to a third party, employers can be held “vicariously liable”. But to what extent is an employer liable for the employee’s actions?
The most common form of vicarious liability is when employers are held liable for their employees’ actions when they are discharging their employment duties and inadvertently cause loss or damage to a third party. There are two main policy rationales as to why employers should be held vicariously liable: 1) it increases the likelihood that victims will receive compensation for their damage or loss; and 2) it acts as a deterrent mechanism to prevent future harm.
A more complicated issue, which arose in the Ontario Court of Appeal (ONCA) case Ivic v. Lakovic, 2017 ONCA 446, is when employers should be liable for acts of their employees that are unauthorized and intentionally wrong.
In Ivic, a taxi driver was accused of sexually assaulting a passenger in the taxi. The driver had no criminal record and there was no evidence that the taxi company knew the driver was likely to sexually assault passengers. In addition to the driver and the owner and primary operator of the taxi, the passenger sued the taxi company pleading that it was vicariously liable for the actions of the taxi driver, that the company was negligent, and that the company owed her a fiduciary duty and had breached that duty. In summary judgement, the motion judge dismissed the passenger’s claim against the taxi company. She appealed, and the appeal focuses on the claim of the taxi company’s vicarious liability.
In its decision ONCA reinforced the idea that courts are “reluctant to impose no-fault liability for abhorrent, intentional acts on the part of an employee.” The ONCA referenced the Supreme Court of Canada (SCC) decision, Bazley v. Curry, stating, “A wrong that is only coincidentally linked to the activity of the employer and duties of the employee cannot justify the imposition of vicarious liability on the employer.” The ONCA further quoted the Bazley decision, stating, “the fundamental question is whether the wrongful act is sufficiently related to conduct authorized by the employer to justify the imposition of vicarious liability.”
In Bazley, the SCC outlined a non-exhaustive list of factors to help determine whether the wrongful act by the employee was sufficiently connected to an employer’s creation or enhancement of a risk:
- the opportunity that the enterprise afforded the employee to abuse his or her power;
- the extent to which the wrongful act may have furthered the employer’s aims (and hence be more likely to have been committed by the employee);
- the extent to which the wrongful act was related to friction, confrontation or intimacy inherent in the employer’s enterprise;
- the extent of power conferred on the employee in relation to the victim; and,
- the vulnerability of potential victims to the wrongful exercise of the employee’s power.
In applying this list of factors to this specific case, the ONCA found that the taxi company provided the opportunity for the employee to abuse his power; the sexual assault did not further the taxi company’s aims; the sexual assault was not related to friction, confrontation or intimacy inherent in the employer’s enterprise; the taxi company did not confer any power to the taxi driver in relation to the passenger; and that the passenger was vulnerable.
Taking the factors into account, the ONCA found that the taxi company did not significantly increase the risk of the passenger being sexually assaulted by allowing the taxi driver to drive the taxi and by requesting him to drive the passenger. The ONCA dismissed the appeal.
This may not be the end of the case, however. An application for leave to appeal has been filed by the passenger with the SCC. So time will tell whether or not the issue of vicarious liability will once again be examined by the SCC.
Minken Employment Lawyers is your source for expert advice and advocacy on today’s employment law issues. Whether you are an employer or an employee, we can help. Contact us at 905 477-7011 to see how.
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