A legal theory under which employers can be held responsible for injuries caused by their employees if it can be shown that they failed to make reasonable inquiries into the employee’s background and suitability for employment. Most negligent hiring lawsuits maintain that the employer failed to conduct appropriate research into the background of the applicant such as reference checks, criminal convictions research and other background information that would have disclosed the employee’s past misconduct. An employer may be found liable for negligent hiring when an employee causes harm to a co-worker, customer or member of the general public– whether or not the employee is acting within the scope of his/her job duties.

It is crucial that any company properly screen all potential employment applicants to ensure they are hiring someone that will provide an adequate level of performance, but also to ensure they are not hiring someone that will cause irreparable harm to financial stability and integrity of their business.

Case Study

In late 2009, an Edmonton based company hired a manager to operate and oversee a new division of the company. Following months of financial irregularities, a brief investigation determined the employee was currently facing over 50 counts of theft and fraud involving several victims. The new employee was misappropriating gross amounts of company funds and selling company assets. The resulting loss led to the eventual demise of the company.


Corporate Investigations
Due Diligence