The Fundamentals

Vicarious liability is a legal concept which holds a company responsible for the wrongdoing of an employee. Should the vicarious liability argument succeed, there is no need to establish any improper conduct of the company. The liability, in this sense, is said to be “strict”. ¹

This is not limited to just an employment relationship. However, the most frequent context which leads to a finding of vicarious liability is that of employee and employer.

Importantly, within a workplace context, it does not necessarily follow that every employment relationship will lead to a finding of vicarious liability. To the contrary, it is a difficult submission to make successfully.

Interestingly, the Nova Scotia Court of Appeal ² found that a claim which is founded only on a breach of fiduciary duty, with no accompanying tort claim, will not support a claim for the vicarious liability of the employer. This is so as this obligation is a personal one and is not delegable. There may be liability as a co-fiduciary but this is a distinctive plea.

The most frequent relationship which creates vicarious liability is that of employee and employer. ³

It does not, however, follow that once such a relationship is established, that liability will follow. Conduct which is only coincidentally linked to the business of the employer and the duties of the employee cannot justify the imposition of vicarious liability. The conduct in these cases is independent of the employment situation and further the employer was not in a position to prevent this behaviour. The conduct must be closely and materially related to the risk introduced or enhanced by the employer for vicarious liability to be imposed. ⁴

Closely & Materially Related

It is critical that the wrongdoing of the employee must be “closely and materially” related to the business of the employer. Conduct which is only coincidentally linked to the business of the employer and the duties of the employee will not justify the imposition of vicarious liability.

For example, should a man assault his wife’s lover, a co-worker, in an employee’s lounge, the employer should not be viewed as accountable. Equally, a security guard who decided to commit arson for his own amusement would not give rise to strict liability upon his employer.

However, a barista who accidentally poured hot water on a customer at the Starbucks counter is a good example of a case in which a finding of vicarious liability would likely be made. The conduct of the employee is one which is clearly “closely and materially” related to the wrongdoing.

However, if the employee’s conduct was deliberate, if the barista intentionally threw scalding hot water in the face of a customer, it would be unlikely that such a finding would follow.

The basic premise of the cases finding strict liability is that the conduct of the employee falls within the ambit of the risk created by the business, or enhanced by it. The policy arises where the wrong is so connected with the employment that it can be said that the employer has introduced the risk itself.

Hence, where the risk is closely associated with the wrongful conduct, the employer should bear the risk and internalize the full cost of operation, including such liability. But where the wrongful act does not have a meaningful connection to the business, liability should not flow. The “mere opportunity” to commit a wrongdoing does not suffice. The business and employment must not only provide “the locale or the bare opportunity for the employee to commit his or her wrong, it must materially enhance the risk, in the sense of significantly contributing to it, before it is fair to hold the employer vicariously liable.” ⁵

In determining the application of vicarious liability on a policy basis, courts should be guided by the following principles, where precedent cases are inconclusive. This is the first step, to ask “whether there are any precedents which unambiguously determine whether vicarious liability should apply in the circumstances” to determine liability in cases of unauthorized intentional wrong.

1. The question of liability should be openly confronted and not disguised under the rubric of “scope of employment” and “mode of conduct”;
2. The basic issue is whether the maligned conduct is sufficiently related to the authorized conduct. There should be a significant connection between the creation or enhancement of a risk and the resultant wrong that so accrues, even where this is unrelated to the employer’s objectives.

To assess the sufficiency of the connection between the employer’s creation or enhancement of the risk, and the conduct in question, the following factors should be considered, in determining liability for intentional conduct:

1. the opportunity that the business gave the employee to abuse his power;
2. the extent to which the wrongful conduct may have furthered the employer’s aims;
3. the extent to which the acts in question were related to friction, confrontation or intimacy inherent in the business;
4. the extent of power conferred on the employee in relation to the victim;
5. the vulnerability of potential victims to the wrongful exercise of the employee’s power.

In an Alberta civil action for sexual harassment, the factors considered were that (1) the personal defendant  was her boss and consistently one of the only other persons in the office, (2) he was her direct boss, (3) she was led to believe that he was the only person in charge, (4) the two were often alone and (4) there was no corporate policy on sexual harassment. These factors, as noted by the Court of Appeal, materially enhanced the risk of tortious actions. Vicarious liability was found at trial. The decision was affirmed on appeal but this question was not addressed on appeal. ⁶

An exception was taken to this decision by a B.C. decision ⁷ firstly noting that the above case did not fully apply the first step by asking the question of “whether there are any precedents which unambiguously determine whether vicarious liability should apply in the circumstances”.

More significantly, the B.C. decision noted that the Alberta trial decision did not complete the first step in the analysis by canvassing prior decisions on topic.

In the application of the connection between the creation of the risk and the wrong, “incidental connections to the employment enterprise, like time and place (without more), will not suffice”.

The court found against the imposition of vicarious liability as (1) the opportunity given to the personal defendant to abuse his power was not significant, (2) the assignment of work was done openly, (3) there was ample opportunity for employees to raise issues about work or work assignments to senior management, (4) the wrongdoing did not further the employer’s aims, (5) there was no friction, confrontation or intimacy inherent in the business, (6) there was nothing in the business of residential plumbing service which created situations of intimacy between employees, (7) the power given to the wrongdoer was supervisory with respect to the plaintiff, but limited and such power was not one which could be readily abused.

The very fact of supervision of one employee of another, the court stated, should not give rise to vicarious liability. From a broad policy overview, a contrary finding, the court stated, would create economic hardship to the business community.

Similarly, the Manitoba Court of Appeal concluded in Robertson v Manitoba Keewatanowi that there was no material connection to support the vicarious liability submission.

The facts, as alleged, in this case, were that the plaintiff's superior made plans, while at work, to socialize with her after work hours to celebrate her birthday. Hart, the superior, met with the plaintiff and her partner at a restaurant, after which she and her partner attended his residence, where it was alleged he sexually assaulted the plaintiff. The case was dismissed on a motion to dismiss, which succeeded and was upheld on appeal. These alleged facts were far from reaching the test.

The Ontario Court of Appeal on Vicarious Liability

The Ontario Court of Appeal recently considered this issue in a case involving a taxi cab driver who had committed a sexual assault upon an intoxicated female passenger in the course of his job responsibilities. ⁸The Court noted that the application of this concept becomes even more difficult in the case of an authorized intentional wrongdoing such as sexual assault.

The Court of Appeal upheld the trial decision dismissing the argument of vicarious liability and in so doing reviewed the tests of vicarious liability.

First Factor Opportunity – Opportunity for Abuse

The Court saw this issue as “not negligible” as intoxicated passengers, as in this case, must be trusting of the driver. The cab driver has a form of power and has the ability to create chances for abusive conduct. The Court saw, however, the opportunity for misconduct as “not as intimately connected to his functions”.

Second and Third Factors – Does Wrongdoing Extend the Employer’s Business; Extent to which the Business Purpose related to friction, confrontation or intimacy inherent in the business;

The assault did not promote the employer’s business purpose and was “not related to friction, confrontation or intimacy inherent in the employer’s aims”. The Court found that the fact that the employer did not require or permit physical contact between the driver and the passenger “in any intimate body zones” was influential. In fact the company’s written directions were to avoid physical contact and dating requests.

Fourth Factor - Extent of Power Conferred on the Employee in Relation to the Victim;

To this issue, the Court noted that the employer delegated no power on the driver with respect to the plaintiff. It did not know that it as sending its driver to pick up a lone, intoxicated woman. The Court stated:

The relationship between the driver and the appellant was that of adult driver and adult fee-paying passenger.  Arguably, what power the driver had, he arrogated to himself through his own decisions.

Fifth Factor - Vulnerability

Clearly a lone drunk woman was vulnerable. However, as the Court stated, while this is an important factor, the power of the driver is not predicated on his employment. In any event, vulnerability does not per se provide the “strong link”.

The strong connection required for the finding of vicarious liability failed. Further from a policy prospective, the Court was not moved by the need to find “deep pockets”.

What Does this Mean in the Workplace?

The practical consequence to the person suing is apparent. It is very important to attach liability upon an entity able to pay. Ironically, it may also be in the best interests of the taxi cab driver or the barista to have the employer held responsible as such a finding will likely mean no attempt will be made to collect on a judgment against them.

This principle may also be used in a sexual harassment case, that is, by a tort, brought by an employee against a co-employee and by vicarious liability, against the employer. It will be, however, a difficult case to make in most fact situations.

Vicarious Liability a Tough Road to Hoe

Companies facing a claim of vicarious liability must understand the means of defending such a claim as noted above. The need for a “close and material” connection will often lead to a successful defence. The failure to do so will put the company in the shoes of the employee being sued. No matter if the employer’s conduct and practices are pristine, liability will nonetheless follow.

Employees may consider this issue from two perspectives. The first is in the context of making a claim against the company and a co-employee for sexual or other abuse in the workplace. The second circumstance so where the employee is directly sued by an outside player or a present or former workplace colleague. In each instance direction must again be focused on this difficult test of this “close and material” connection.

All this being said, the employer was found to be vicariously liable for the wrongdoings of its employee in Boucher v Wal-Mart, a case which was before by a jury. There are accordingly no reasons given demonstrating how liability was established. The claim against the employee, Pinnock, at trial was set at $100,000 for the intentional infliction of mental suffering and $150,000 in punitive damages.

The liability issue was not challenged on appeal, although this punitive award was reduced to $10,000.

OSC December 2022

The Ontario court considered a fact situation in which the employee had been physically struck by his superior in the testicles which required surgery to treat. ⁹ The court found in favour of the applying the principle to make the employer vicariously liable noting the following factors:

1. The offender was the plaintiff's direct supervisor;
2. The event took place at a meeting in which work assignments were being reviewed.

It is hard to conceive that this facts met the historical test of "close and material" to establish the principle. If so, every workplace abuse by a superior would meet this definition.

The decision also observed that the offender had been previously warned by the employer to cease such conduct in March of 2019, following which the conduct continued and that the company had done "precious little" to investigate the incidents or prevent a repetition of them.

This factor is not one previously recited as being of influence. No appeal was taken of this finding.

Punitive Damages

The trial judge in Osmani did note that where vicarious liability has been established, and punitive damages awarded against the individual wrongdoer, this would not lead to employer liability, failing a finding that the employer was shown to have engaged in conduct which was "reprehensible", a factor absent in this case. ¹⁰

Statutory Provisions

In Sulz, the determination of vicarious liability of the Attorney-General was based on the federal Crown Liability and Proceedings Act which made the federal crown liable for torts committed by its servants in the course of their duties.

Similar Concepts

This issue is distinct from the "controlling mind" concept which is discussed here and the principles of human rights jurisprudence which is reviewed here.