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Negligent Retention

>> HR Glossary/  General HR Terms / Negligent Retention

What is negligent retention?

Negligent retention refers to a situation where an employer fails to terminate an employee they knew was unfit for the job, especially when that unfitness poses a danger or harm to others.

When an employer does not take reasonable action to discipline and/or terminate an employee, they can be held legally liable. Some examples of negligent retention include keeping an employee who verbally harasses, threatens, intimidates, or physically harms others.

What are the elements of negligent retention?

The key elements of negligent retention generally include:

  • Employer-employee relationship: There must be a formal or informal employment relationship with the employee at the time of the misconduct.
  • Unfitness: The employee has demonstrated harmful behavior, incompetence, or other actions that make them unsuitable to perform the job responsibilities.
  • Employer knowledge: The employer had previous knowledge (or should have known) about the employee’s misconduct or unfitness.
  • Harm to others: The employee has caused physical, psychological, or financial damage, such as violence, harassment, or theft.
  • Failure to take action: The employer failed to take appropriate disciplinary action, such as verbal and written warnings, close monitoring and supervision, or termination of employment.
  • Damages: The employee’s actions have resulted in injuries or losses to other individuals or the company. Damages may include medical expenses, psychological harm, or financial loss.

Negligent retention vs negligent hiring

These are some of the critical differences between negligent retention and negligent hiring:

AspectNegligent retentionNegligent hiring
DefinitionWhen an employer fails to dismiss an employee they knew (or should have known) posed a danger or harm to othersWhen an employer does not carry out a proper background check on a prospective employee who later causes harm or damage during their employment
Focus areasConcerns whether an employer took reasonable measures to monitor an employee’s misconduct, unfitness, or incompetence, allowing them to stay despite evidence of their actionsConcerns an employer’s actions (or inaction) during the hiring process, questioning whether they took appropriate steps to screen a candidate to ensure they were suitable for the job
Examples of oversightIgnoring reports of misconduct, failure to act on performance issues, or not addressing complaints about the employeeFailing to perform background checks, ignoring past misconduct, or not verifying qualifications or references
Employer liabilityEmployers may be held liable if they knew (or should have known) about an employee’s misconduct and did not take appropriate steps to discipline or terminate themAn employer may be held liable if they didn’t conduct a standard pre-screening process, verify qualifications, or ignored evidence of misconduct by a potential employee
Proof neededA plaintiff has to demonstrate that an employer knew (or should have known) about an employee’s misconduct and this inaction caused damage or harmA plaintiff has to prove that the employer’s failure to screen a candidate correctly resulted in harm to others

Negligent hiring case law

In a landmark negligent hiring case, Charter Communications (which also operates as Spectrum) was found liable for the homicide of a customer by one of their technicians. The company was ordered to pay over $7 billion. The lawsuit exposed Spectrum’s lack of background checks and the serious consequences of not following standard pre-screening processes.

Negligent retention examples

  • Physical violence: An employer fails to terminate an employee with a history of physical disputes after several verbal and written warnings. The employee later seriously injures another co-worker.
  • Bullying and intimidation: A school overlooks a teacher’s history of bullying new teachers despite several complaints, leading to emotional distress and high turnover.
  • Sexual harassment: A senior executive with several documented cases of making sexual advances is not disciplined because of their level of seniority.
  • Theft: A bank does not investigate a teller’s suspicious financial transactions, leading to economic losses for several clients.
  • Fraud: A real estate agency is aware of an agent’s history of hiding property defects but ignores it because of the agent’s high performance. Because of the employer’s inaction, several buyers experienced serious property and financial damages.

7 ways HR can avoid negligent retention

HR can play a significant role in preventing negligent retention in the workplace. Here’s how:

1. Conduct thorough background checks: Every potential employee should be thoroughly screened during the hiring process. Conduct reference checks to identify any potential red flags that impact a candidate’s suitability for the role.

2. Address issues quickly: When an employee’s actions cause problems or are a risk to others, HR should immediately deal with the issue. Actions could include verbal and written warnings, close monitoring, and investigations.

7 things HR can do to avoid negligent retention in their organization.

3. Establish clear HR policies: Ensure HR policies clearly outline expectations for employee behavior and disciplinary actions for misconduct. These policies should be communicated during onboarding and regularly reiterated to employees.

4. Implement performance management systems: Having performance management systems in place, HR can provide a formal, comprehensive structure for evaluating employee behavior and performance. HR should also provide managers with training on how to take disciplinary action.

5. Provide employee training: Offer training to employees so that they are aware of inappropriate behavior and the consequences for failing to follow employee conduct standards.

6. Ensure consistent discipline standards: Develop a consistent disciplinary policy for all employees, avoiding favoritism or inconsistency depending on an employee’s role, level of seniority, etc.

7. Establish a zero-tolerance policy: For severe cases of employee misconduct like physical violence, threats, and sexual harassment, establish a zero-tolerance policy, like immediate termination.

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