Employers are strictly liable for the actions of its supervisors, managers or agents under the doctrine street cafeof respondeat superior.  Here are five key concepts employers must understand about the liability that could be created by managerial employees.

1. Respondeat superior holds employers automatically liable for actions by managers

The respondeat superior doctrine provides that “an employer may be held vicariously liable for torts committed by an employee within the scope of employment.”  As explained by the California Supreme Court in Patterson v. Dominio’s Pizza, there are “three policy justifications for the respondeat superior doctrine…prevention, compensation and risk allocation.”

2. Employers liability for non-supervisory employees

Under California’s FEHA, the employer is strictly liable for harassing action of its supervisors.  However, an employer is only liable for harassment by a coworker if the employer knew or should have known of the conduct and failed to take immediate corrective action.

3. Managers/supervisors under the respondeat superior doctrine

Under California’s FEHA, an employer is strictly liable for all acts of a supervisor.  A supervisor is generally defined as someone who has the discretion and authority to hire, direct, transfer, promote, assign, reward, discipline, direct, or discharge other employees or to recommend these actions.  See Government Code section 12926(t).

4. Which entities may be considered the employer under the respondeat superior doctrine

 In terms of defining who is the employers, courts in FEHA cases have looked to “the control exercised by the employer over the employee’s performance of employment duties….This standard requires a ‘comprehensive and immediate level of `day-to-day’ authority’ over matters such as hiring, firing, direction, supervision, and discipline of the employee.”  FEHA also defines employer to mean “any person action as an agent of an employer, directly or indirectly….”  This means that people not directly employed by the company can still create agency liability for the employer.

5. Issue: Can a franchisor be held liable for a franchisee’s supervisor’s conduct?

How far does the doctrine of respondeat superior extend when there are levels of agency, such as in a franchisor-franchisee relationship?  This was the issue addressed by the California Supreme Court in Patterson v. Domino’s Pizza.  The Supreme Court held that given the facts in that case, Domino’s Pizza was not liable for the franchisee’s manager’s acts.  The Supreme Court explained:

A major incentive is the franchisee’s right to hire the people who work for him, and to oversee their performance each day. A franchisor enters this arena, and becomes potentially liable for actions of the franchisee’s employees, only if it has retained or assumed a general right of control over factors such as hiring, direction, supervision, discipline, discharge, and relevant day-to-day aspects of the workplace behavior of the franchisee’s employees.  Any other guiding principle would disrupt the franchise relationship.

The Supreme Court did not hold the franchisor liable in the case because it did not “control the workforce, and could not have prevented the misconduct and corrected its effects.”  However, the Court issued a warning to franchisors:

A franchisor will be liable if it has retained or assumed the right of general control over the relevant day-to-day operations at its franchised locations that we have described, and cannot escape liability in such a case merely because it failed or declined to establish a policy with regard to that particular conduct.

In an opinion last month that did not receive much attention on the employment-law front was the case Lobo v. Tamco, which has huge ramifications for California employers. At issue was if the employer, Tamco, could legally be held liable for one of its’ employee’s negligent driving while he was on his way home. The court found that the employer could be held liable under an exemption to the “going-and-coming” rule.

This case was filed by Daniel Lobo’s wife and minor child. Mr. Lobo was a deputy sheriff who was killed by the allegedly negligent driving of Luis Duay Del Rosario who had just left work and was driving home. The officer was on a motorcycle, and was apparently responding to a call with his lights and sirens on, when the two collided. The family members sued Mr. Rosario’s employer (most likely because Mr. Rosario does not have any assets). The employer argued that because Mr. Rosario was going home, there could be no liability on its part. The court disagreed.

The “going-and-coming” rule and its exception

The court explained that normally employers are not liable for employee’s acts when they are not in the “course and scope of employment”:

Under the theory of respondeat superior, employers are vicariously liable for tortious acts committed by employees during the course and scope of their employment. [citation] However, under the “going and coming” rule, employers are generally exempt from liability for tortious acts committed by employees while on their way to and from work because employees are said to be outside of the course and scope of employment during their daily commute. (Huntsinger v. Glass Containers Corp. (1972) 22 Cal.App.3d 803, 807 [Fourth Dist., Div. Two] (Huntsinger).)

The court, however, also explained that there is an exception to the general rule:

“A well-known exception to the going-and-coming rule arises where the use of the car gives some incidental benefit to the employer. Thus, the key inquiry is whether there is an incidental benefit derived by the employer. [Citation.]” (State Farm Mut. Auto. Ins. Co. v. Haight (1988) 205 Cal.App.3d 223, 241.) This exception to the going and coming rule, carved out by this court in Huntsinger, supra, 22 Cal.App.3d 803, has been referred to as the “required-vehicle” exception. (Tryer v. Ojai Valley School (1992) 9 Cal.App.4th 1476, 1481.) The exception can apply if the use of a personally owned vehicle is either an express or implied condition of employment (Hinojosa v. Workmen’s Comp. Appeals Bd. (1972) 8 Cal.3d 150, 152), or if the employee has agreed, expressly or implicitly, to make the vehicle available as an accommodation to the employer and the employer has “reasonably come to rely upon its use and [to] expect the employee to make the vehicle available on a regular basis while still not requiring it as a condition of employment.” (County of Tulare v. Workers’ Comp. Appeals Bd. (1985) 170 Cal.App.3d 1247, 1253.)

But what if the employee rarely uses their car for company business?

It does not matter how frequently or infrequently the employee uses their car for company purposes to establish the exception.  Here, the employer argued that the exemption to the going-and-coming rule did not apply because Mr. Rosario rarely used his care for company purposes. The evidence was that he only used his car 10 times or fewer during the 16 years he worked for Tamco. The court was not persuaded by this argument, and noted that there was not case law to support the argument. The fact that Mr. Rosario sometimes needed to use his car for company purposes was sufficient to establish the exception to the going-and-coming rule.

This case should be a call to employers to review if they require their employees to use their personal cars for work, and if this could create potential liability for the employer even though the employee is driving to or from work.