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A recent decision by the Ohio Court of Appeals examines the issue of employer liability for a worker’s harmful acts. The Twelfth District Court of Appeals clarified when an employer could be liable for injuries caused by a worker’s violent behavior, whether the worker is an independent contractor or an employee.
Worker’s violent behavior leads to a lawsuit
The Spurlocks hired Mr. Hogeback to perform carpentry worker when renovating their farmhouse into a bed and breakfast. While working for the Spurlocks, Hogeback got into an altercation with an employee of a construction company that was also performing work on the Spurlock property. Mr. Jackson, who was visiting the site to inquire about work, stepped in to prevent the fight and was injured by Hogeback.
Jackson brought suit against Hogeback and also against the Spurlocks and their business, alleging assault and battery, negligence, vicarious liability and negligent hiring, supervision and retention. A jury ruled in Jackson’s favor for the claims against Hogeback, but the Butler County Court of Common Pleas granted Spurlocks’ request to release all claims against them and not allow the claims to be decided by the jury.
The case goes to the Court of Appeals
Jackson appealed the trial court’s decision in regards to the Spurlocks, arguing on appeal that the Spurlocks were vicariously responsible for Hogeback’s actions as their employee and also that the Spurlocks were directly liable for failing to exercise reasonable care in controlling Hogeback and for negligent hiring, supervision and retention of Hogeback.
The Twelfth District Court of Appeals reviewed the decision to determine whether the trial court had properly relieved the Spurlocks from liability. The court quickly narrowed its focus to the claim of negligent hiring, supervision and retention, holding that the trial court was correct in regards to all other claims against the Spurlocks.
Liability for negligent hiring, supervision and retention
A claim of negligent hiring, supervision and retention can create liability for selecting or allowing a person to work when the employer knows or should have known of the hired individual's violent or dangerous propensities. Under this theory, Jackson had to show that the Spurlocks knew or should have known of Hogeback’s violent propensities and should have foreseen the assault on Jackson.
The court of appeals dispensed with the Spurlocks’ arguments that they should not be liable under this claim because Hogeback was an independent contractor rather than an employee. Liability for negligent hiring, supervision and retention can arise regardless of whether the assailant is an employee or an independent contractor, said the court.
According to the court of appeals, a review of the court record showed that Jackson had presented evidence that the Spurlocks may have had knowledge of Hogeback’s propensity to use physical violence. Testimony that Mrs. Spurlock had stated "this has happened before," and "oh, no, not again" when she learned of the fight; that workers had complained to the Spurlocks about Hogeback’s “aggressive and rude behavior”; and that Mrs. Spurlock had attempted to arrange for the workers who complained about Hogeback to be on the property when Hogeback would not be there all pointed to a possibility that the Spurlocks may have known of and anticipated problems from Hogeback’s dangerous propensities. Given this evidence, the court of appeals concluded that the common pleas judge should have allowed the jury to render a verdict on the issue.
The court of appeals sent the case back to the common pleas court for further proceedings to determine whether there was sufficient evidence on the issue of negligent hiring, supervision and retention.
Implications for employers
We state as a general rule that employers are not usually liable for intentional, harmful acts of an employee when those acts are outside of the employee’s work responsibilities. The Hogeback v Jackson case is a reminder of exceptions to the general rule:
- A successful claim of negligent hiring, supervision and retention can result in employer liability for a worker’s bad acts, which requires proof that an employer knew or should have known about the worker’s dangerous propensities and it was foreseeable that the worker’s behaviors could lead to harm.
- Negligent hiring, supervision and retention can apply even if an independent contractor, rather than an employee, commits the harmful acts.
Employers can reduce this risk of liability by using practices and policies to help prevent the hiring and retention of a person who poses risks of harm to others:
Investigation into a potential employee or independent contractor’s background through these tools:
- Job applications that request detailed information about previous employment, reasons for leaving a job, and employer contact information.
- Reference checks with previous employers and other references.
- Background checks. See the Ohio Attorney General’s information about conducting a background check.
- Drug tests. Ohio law allows for private companies to conduct drug testing on a non-discriminatory basis. The Ohio Bureau of Workers’ Compensation offers a Drug-Free Safety Program for eligible employers.
Detection of and reaction to worker behaviors:
- Monitoring for incidents of unusual, violent or dangerous behaviors.
- Encouraging employees to report dangerous behaviors in other workers.
- Policies for corrective actions to take, including termination, upon awareness of dangerous behaviors.
- Prompt enforcement of all practices and policies.
Read the Court of Appeals decision in the Jackson v. Hogeback case here.
Larry Gearhardt, OSU Extension Asst. Professor, Taxation
Ohio Governor John Kasich recently signed a bill that, among other things, increases the small business income deduction from 50 percent to 75 percent of the first $250,000 in net business income.
In an effort to grow Ohio’s economy, last year the Ohio budget bill included significant tax law changes to deliver a $2.7 billion tax cut to individuals and businesses, over the course of three years. The changes included:
- A small business tax cut that enables owners/investors to deduct from taxable income 50 percent of the first $250,000 in net business income.
- A 10 percent personal income tax cut to be phased in over three years. In 2013, Ohio tax rates were reduced by 8.5 percent.
- New assistance for lower-income Ohioans in the form of an Earned Income Tax Credit (EITC) equal to five percent of the amount claimed for the federal EITC.
An improving economy is generating stronger than expected state revenue, resulting in additional tax cuts. The Governor’s Mid-Biennium Review (HB 483) included the following additional tax relief:
- ADDITIONAL SMALL BUSINESS TAX CUTS – For tax year 2014, the personal income tax deduction on small business income will be increased to 75 percent of the first $250,000 in net business income. (Under current law, the deduction does not affect the school district income tax base).
- ACCELERATING THE INCOME TAX CUT – Next year’s scheduled one percent cut in income tax rates is moving up to be effective retroactive to January 1, 2014. This change will give taxpayers the full 10 percent income tax cut that was not scheduled to go into effect until January 2015.
- NEW TAX RELIEF FOR LOW-AND MIDDLE-INCOME OHIOANS – Ohio is doubling the EITC from 5 to 10 percent of the federal credit. In addition, the state is increasing the personal exemption for Ohioans earning less than $40,000 a year from $1700 to $2200, and for those with incomes between $40,000 and $80,000 a year from $1700 to $1950.
Business income is defined as income from the regular conduct of a trade or business, including gains and losses. It also includes gains and losses from liquidating a business or selling goodwill. The deduction applies only to the business income apportioned to Ohio under existing law.
The business deduction percentage reverts back to 50 percent for taxable years after 2014.