Negligent Hiring and the Importance of Doing Your Due Diligence

Ensuring a candidate is a good fit is the most important part of making a successful placement. Not doing so can lead to disgruntled clients and their employees and customers. In more serious cases, it can even lead to negligent hiring claims.

As a recruiter, you might take on many responsibilities of employers, like conducting pre-employment tests. If you offer contract staffing services, you need to learn as much about the individual’s background as possible. Failing to do so can be considered negligent hiring and land you in a lawsuit.

What is negligent hiring?

Negligent hiring is a legal claim made against an employer. It is made by an individual (i.e., employee or customer) who is injured by an employee with a history reflecting similar incidents. The negligent hiring claim argues that the employer knew or should have known their history before hiring them.

Basically, if you are not diligent about finding out a candidate’s background, you could be responsible for their actions.

Negligent hiring can be the most damaging in professions that require one-on-one care (home health care aide), have access to passwords or keys (real estate agent), and deal with finances (bursar).

Example of negligent hiring

Let’s say you place a contract employee, Employee A, with one of your clients. You remain the employer of record. Employee A assaults Employee B. Employee B is injured and files a negligent hiring claim against you.

Employee A’s background check reveals they were convicted of aggravated assault five years before you hired them. You did not conduct a background check.

Since Employee A had a history of assault, you are liable for damage done to Employee B. Because you didn’t conduct a pre-employment background check, you put your business and your client’s business, employees, and customers at risk.

Negligent hiring laws by state

Damages for wrongful hiring practices are enforced by states. The American Bar Association provides a state-by-state document that details each state’s definition of negligent hiring.

For example, negligent hiring occurs in Montana when an employer is aware or should be aware of an employee’s unfitness during their employment but does nothing.

In Rhode Island, negligent hiring is when an employer does not exercise care in selecting an employee who is competent and fit for the position.

Overall, states recognize negligent hiring as damaging to a business, its employees, and its customers.

How to avoid negligent hiring claims

Negligent hiring comes from placing a candidate without researching their background. The majority (53%) of candidates applying for a job include false information on their resumes or applications. Though some of these details may not harm your recruitment agency or your client’s business, it’s important to find out as much as you can about candidates before you place them.

To avoid negligent hiring claims, be thorough with your research. When recruiting, don’t just refer the first candidate you find. You also need to screen, interview, and conduct pre-employment testing to learn more about each candidate.

Here are some steps you can take to avoid negligent hiring claims. You should:

  • Conduct background checks
  • Contact previous employers and do a thorough employment reference check
  • Enforce drug testing
  • Perform credit reports
  • Validate qualifications and candidate claims (i.e., college degree)

You might need to perform more tests, depending on the industry you are recruiting for. Some tests might look at medical exams and driving records.

Keep in mind that the tests you conduct need to be reasonable and nondiscriminatory. The tests you run should be standard for every candidate.

How negligent hiring can affect you

If you don’t take precautions when hiring, your contracting business or your client’s company could wind up with injured employees or stolen money. Going through negligent hiring lawsuits can cost you astronomically.

According to one source, the average settlement of a negligent hiring lawsuit is about one million dollars. And, the chances of winning negligent hiring cases are slim with over 79% of employers losing.

Your reputation could be damaged from wrongful hiring, as well. Take the time to verify that a placement is safe, honest, and trustworthy.