The following excerpt is from Don’t Get Sued! A Guide to Help Reduce Your Business’s Exposure to Lawsuits, a guide authored by attorney Roger K. Gelb. Chapter 3 reads as follows:
If one of your employee’s injures one of your invitees, is the business liable? The answer is sometimes. In general, if your employee intentionally injures an invitee then, unless there was reason to know that the employee would act that way (history that you, the employer, were aware of or should have been aware of), the store probably is not liable for the employee’s intentional actions. Beyond that, the store’s insurance coverage probably will not cover the loss.
Whether you actually know of an employee’s violent tendencies is the easy part, but in what cases should you have been aware of the employee’s violent propensities? Watch out for obvious red flags, such as a bad temper that the employee flashes in front of you and others. And if that temper combines with violence, and there are witnesses, your business may be on the hook if the employee injures and invitee.
An employee handbook that is provided to every employee may be a good idea. The handbook should cover many subjects, including: appropriate dress for the workplace, how to interact with fellow-employees (including supervisors and subordinates) and customers, what type of behavior is appropriate in the workplace, vacation time, sick leave and other topics which may be unique to your business. Be sure to obtain a signature from the employee confirming that they have received the handbook and will read it and obey the rules.
The employee handbook is different from a contract of employment, which I would urge that you not provide. A contract of employment, while it may cement your agreement with your employees as far as pay and benefits go, it will also no doubt cover termination. In most cases, such agreements only provide unnecessary restrictions on the employer as to when and how an employee may be fired. Typically, absent such an agreement, an employee is considered an “employee at will” and may be terminated for almost any reason. Naturally, most jurisdictions have laws in place that ensure that the reasons for the termination are not based on race, religion, sexual orientation, etc.
What if your employee negligently injures one of your customers? In general, your business is liable under the doctrine of Respondeat Superior, which is a fancy way of saying that an employer is liable for the negligent actions of his or her employee. Appropriate insurance coverage should cover these types of claims.