Employers place themselves at risk for being sued when they neglect to establish and follow sound hiring policies and practices. The key to avoiding such charges is preventative action that focuses on hiring people who are not only qualified for the job, but also unlikely to present a legal risk for the employer.

Elements of Negligent Hiring

Indiana has long recognized a cause of action for negligent hiring and retention of an employee. To prevail on such a theory, a plaintiff must show that the employer negligently retained an employee who the employer knew was in the habit of misconducting himself.
To be liable, the employer must have known or should have known that the employee was unfit for hiring. "Red flags" triggering the employer's responsibility can be revealed in an interview and/or on an application. Incomplete or indirect responses to questions can reveal areas of concern about that candidate’s fitness for hiring. The following prehire decisions can be found to be negligence: failing to properly train your interviewer as to what questions to ask; failing to follow a hiring policy; failing to conduct a proper job interview; failing to conduct drug testing; failing to conduct reference checks; and failing to conduct a driver’s license check.

An employer can also be negligent for failing to examine the information on an application or for failing to contact an employee’s prior employer to inquire why the employee left his or her last job.

If the employer was negligent in its hiring practices, the plaintiff must still show that he or she was injured as a direct result of the employer’s negligent hiring.

Checking References is Key

Many employers fail to disclose information about an ex-employee’s misconduct for fear of being sued for defamation. But an employer is being negligent when it fails to disclose knowledge of misconduct.

Some Indiana courts have also said that where there is a "substantial, foreseeable risk" that physical injury even to a third party would result form an employer’s failure to disclose information, the employer can be found negligent.

There is, however, a defense to defamation suits by an employee. As long as the information was not knowingly false or given in bad faith, the employer may disclose the information and cannot be sued.

Indiana statutes do, however, prohibit black-listing or preventing a former employee from obtaining employment. The statute does not prevent an employer from providing a truthful, written statement of the reasons for discharge to anyone to whom the employee has applied for employment. Employers are immune from liability unless the employee can prove that the information disclosed was known to be false at the time the disclosure was made.

Indiana statues give an employer a defense against lawsuits if they give a truthful, written response to inquiries about former employees. That means that not only can you seek information about your applicants, you can provide information about your former employees.

Tips for Preventing a Lawsuit

The following suggestions may help prevent a lawsuit for negligent hiring.

Always:

(1) Make sure the job application is completed before the interview.

(2) Review the application for completeness.

(3) Confirm the accuracy of past employment, education and references by calling those individuals listed on the application or using a reference checking service.

(4) Ask about any employment gaps and try to obtain specific explanations for them.

(5) Use the application to find out about any criminal convictions and follow up with questions during the interview. Once you have the information, see if the crime relates to the position for which the applicant is applying.

Additional preventative steps:

(1) If the applicant has previously used another name, find out why and conduct a separate background check under that name.

(2) Obtain a copy of the individual’s driving record.

(3) Conduct a criminal background check in all cities where the applicant has resided.