Don’t Let Vicarious Liability Catch You Off-Guard: 10 Ways to Protect Your Business

Running a business comes with plenty of challenges, and one of the trickiest is vicarious liability, i.e. basically, being held responsible for something your employees do, even if you weren’t involved. Whether it’s a mistake, bad decision, or intentional wrongdoing, it can hurt your company’s reputation and finances.

But don’t panic! With some smart moves, you can protect your business and create a workplace where everyone follows the rules. Here’s how:

1. Clear Job Descriptions (Employment Contracts) = Fewer Surprises

Think of job descriptions as a playbook, everyone needs to know their role. A well-written employment contract should spell out what an employee can and can’t do on the job. The clearer the expectations, the less likely you’ll be blamed for something that’s not part of their duties.

2. Comprehensive Training Programs: Train, Train, and Train Again

Training isn’t just for new hires. Keep your team updated on workplace rules, safety measures, and ethical behavior. Use real-life examples and role-playing to make it fun and memorable; no one likes boring lectures.

3. Strong Policies = A Stronger Business

Having company policies in place (on behaviour, reporting problems, and handling complaints) is great, but only if people actually follow them. Keep your policies up to date and make sure employees understand them. A forgotten rulebook won’t help anyone.

4. Conduct Background Checks: Hire Wisely

Before bringing someone onto your team, do your homework. A simple background check can help you avoid hiring people with a history of misconduct. It’s like picking teammates for a game, you want to choose reliable players.

5. Keep an Eye on Things

Supervision isn’t about micromanaging; it’s about guiding and supporting your team. Check in regularly, offer feedback, and address small issues before they become big problems.

6. Foster a Positive Workplace Culture

A happy workplace is a productive (and less risky) workplace. Encourage accountability, mutual respect, and professionalism. Celebrate wins, acknowledge contributions, and create an environment where employees feel heard. When employees feel valued, they’re more likely to do the right thing.

7. Stay One Step Ahead: Do Regular Check-Ups

Review your workplace policies, safety procedures, and even your physical work environment from time to time. Catching risks early saves you from bigger headaches later.

8. Outsource with Caution

If you’re working with external contractors or vendors, make sure they share your values. Have clear agreements in place so that if something goes wrong, you’re not the one left holding the bag.

9. Act Promptly on Complaints

When complaints arise, treat them like a fire alarm – respond quickly and decisively. Investigate thoroughly and take appropriate action. A fast, fair response not only addresses the issue but also shows your team that you’re serious about maintaining a safe and ethical workplace.

10. Get Insurance – Just in Case

Even with all these precautions, accidents happen. Business liability insurance like Directors and Officers (D&O) insurance, acts as a safety net, helping to cover legal costs if a claim arises. Think of it as wearing a seatbelt or a helmet—you hope you won’t need it, but you’ll be glad you have it if you do.

Vicarious liability may sound scary, but a little planning goes a long way. Set clear rules, train your team well, and handle issues before they turn into big problems. Not only will this protect your business, but it’ll also create a fair and ethical workplace where everyone wins. So, stay ahead of the game, and keep your company safe and strong.

David Amaara Adaawin on behalf of OSD and Partners. [email protected]