# What Is Vicarious Liability? Example and How to Avoid It

![Vicarious Liability: When a party holds some responsibility for the unlawful or reckless actions of a third party.](https://www.investopedia.com/thmb/kK1WFi19ifUm9z7h7w2C63U--IQ=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/vicarious-liability.asp_FINAL-b21367848bbe453a825c226a31d7a397.png)

*— Investopedia / Hilary Allison*

> **Definition**
>
> Vicarious liability is when one party is held responsible for the actions of another party.

## What Is Vicarious Liability?

Vicarious liability is generally when an employer is held accountable for the actions of an employee, when that employee is performing work for the employer within the scope of their employment. Parents can also be vicariously liable for their children's actions in certain circumstances.

### Key Takeaways

*   Vicarious liability is when a supervisory party is liable for the negligent actions of a [third party](https://www.investopedia.com/terms/t/third-party.asp) for whom they are responsible.
*   Employers can avoid vicarious liability by proactively exercising reasonable care to prevent employees' negligent behavior.
*   Parents can be held vicariously liable for the negligent or criminal actions of their children under certain circumstances.

## How Vicarious Liability Works

Vicarious liability, or imputed liability, is indirect liability for the actions of another person, such as a subordinate or child. An employer can be held liable for an employee's negligent or unlawful action.

An employer might also be held liable if an employee operates equipment or machinery in a negligent or inappropriate way that results in damages to property or personal injury to an individual.

For example, if a construction worker mishandles the controls of a crane and topples the wall of a nearby building, the company overseeing the construction may be held vicariously liable for damages caused. Likewise, if an engineer loses control of a train and it proceeds down the tracks on its own, then the company that owns and operates the train may be liable for any resulting damages and injury.

The employer could be held liable if two factors are proven: The employee must have acted within the scope of their employment, and there must be evidence that the employer did not make any reasonable attempts to prevent and/or limit any harmful acts performed by its employees.

> **Fast Fact**
>
> An employer may avoid being held vicariously liable by ensuring employees exercise reasonable care to prevent unlawful behavior through training and supervision, and by establishing controls.

## Example of Vicarious Liability

Exxon Shipping Co. was held liable for the actions of a tanker captain and crew in the 1989 Exxon Valdez oil spill. A series of negligent events onboard the tanker led to about 10.8 million gallons of [crude oil](https://www.investopedia.com/terms/c/crude-oil.asp) spilling into the sea off Alaska and affecting the shore and animal life.

Among other factors, the company was held accountable for its lack of supervision of the captain, fatigue among crew members aboard the oil tanker, and the condition of radar equipment that might have helped prevent the ship from running aground.

Due to the multiple appeals, a changing award amount, and the gray area of maritime law pertaining to a ship owner being responsible for the actions of an employee, this is a fairly complicated example of vicarious liability.

## How to Avoid Vicarious Liability

*   Actively monitor your workplace, respond to complaints from employees and other parties such as vendors and suppliers, and provide a clear method for registering complaints. Document these actions in detail.
*   Create employee manuals with thorough explanations of rules and expected employee conduct. Ensure that new employees read, understand, and accept them. For existing employees, institute a program of periodic review of such company regulations and behavioral expectations.
*   Provide training programs to employees that detail safety protocols and proper conduct for job positions.
*   Engage a lawyer to review your business or affairs and to discuss the potential for and ramifications of vicarious liability. Request recommendations for methods of protection.
*   If there's potential for vicarious liability, investigate business insurance such as [general liability insurance](https://www.investopedia.com/terms/c/commercial-general-liability-cgl.asp). General liability insurance offers protection in case of alleged third-party property damage or personal and advertising injuries caused by you or an employee. There's also [errors and omissions insurance](https://www.investopedia.com/terms/e/errors-omissions-insurance.asp) that protects you from mistakes made and the failure to provide services.
*   Purchase and maintain the appropriate insurance coverage.

## Special Considerations

Another common source of vicarious liability occurs when a child behaves negligently. The parent can sometimes be held vicariously liable for the child's actions. One situation in which this might occur is if an older child drives off in their parents' car without a license or their knowledge and injures or kills someone. The parents might bear responsibility for allowing the child access to the vehicle.

## What Are the Two Principles of Vicarious Liability?

Two principles must be met to impose vicarious liability for someone's misconduct. An entity or person must be considered answerable for another's actions via a duty to control the negligent person's activities, and the action must be within the scope of the accountable party's relationship to the offender.

## What Is Liability vs. Vicarious Liability?

Liability is when one party is held accountable for its actions. Vicarious liability is when another party is liable for the actions of another party.

## What Is a Vicarious Liability Example?

There are many different circumstances in which you may be held vicariously liable. If you loan your car to someone and they cause a traffic accident, you could be held vicariously liable depending on the circumstances. There have also been cases of vicarious liability where police departments were held liable when duty weapons had been used in crimes after weapons were left unsecured during off-duty periods.

## The Bottom Line

Vicarious liability can occur in several situations when one person is held legally responsible for the actions of another person, such as when an employer is responsible for an employee's misconduct.

If you face a situation where you may be held vicariously liable, consider consulting an attorney for legal guidance.

> **Article Sources**
>
> 1.  De Sousa, Tanya P. "[Oil Over Troubled Waters: Exxon Shipping Co. v. Baker and the Supreme Court's Determination of Punitive Damages in Maritime Law](https://digitalcommons.law.villanova.edu/cgi/viewcontent.cgi?article=1048&context=elj)." _20 Vill. Envtl. L.J._, vol. 2, no. 2, 2009, pp. 247-249.
>     
> 2.  Exxon Valdez Oil Spill Trustee Council. “[Details About the Accident](https://evostc.state.ak.us/oil-spill-facts/details-about-the-accident/).”
>     
> 3.  Oyez. “[Exxon Shipping Co. v. Baker](https://www.oyez.org/cases/2007/07-219).”
>     
> 4.  U.S. Equal Employment Opportunity Commission. "[Enforcement Guidance: Vicarious Liability for Unlawful Harassment by Supervisors](https://www.eeoc.gov/laws/guidance/enforcement-guidance-vicarious-liability-unlawful-harassment-supervisors)."
>     
> 5.  Justicia. "[Vicarious Liability in Personal Injury Lawsuits](https://www.justia.com/injury/negligence-theory/vicarious-liability-respondeat-superior/)."
>     
> 6.  California Accident Attorneys Blog. “[Department Responsible for Officer’s Failure to Secure His Gun](https://www.californiaaccidentattorneysblog.com/department-responsible-for-officers-failure-to-secure-his-gun/).”