Vicarious Liability For Employers In Canada

In layman’s terms, vicarious liability is when an employer is liable for one of its employees’ wrongs. In other words, vicarious liability is when an employer is responsible for paying for the damages caused by an employee’s act even where the employer did not authorize the act or, manifestly, do the act. 

In more legal terms, vicarious liability is a form of “strict liability” (i.e. when a defendant is liable regardless of what his intent was) that imposes liability upon an employer for employee acts once a particular legal test is established (see: A Comparative Look at Vicarious Liability for Intentional Wrongs and Abuses of Power in Canadian Law, 2020 CanLIIDocs 1869).

It is generally in the interest of injured plaintiff’s to prove vicarious liability against an employer when it is appropriate to do so because typically, the employer has more monies (or better insurance) than the employee wrongdoer.

The Test for Vicarious Liability in Canada

Vicarious liability, i.e. legal liability of the employer for employee acts, under the context of employment law in Canada will be established when all three parts of this test are met:

1. There is an employment relationship;
2. An employee commits a tort;
3. And the tort occurred within the scope of employment.

A tort is an act or omission that gives rise to injury or harm to another and amounts to a civil wrong for which courts impose liability. For example, a negligent car accident or an assault committed by an employee is a tort.

Most often, the primary subject of vicarious liability litigation is the third part of the above test, whether, “the tort occurred within the scope of employment.” Injured Plaintiffs must, difficultly, prove that the wrongdoer employee was actually acting in the capacity of “employment” when or she committed the wrong.

“In determining which acts fall within the scope of employment, and therefore give rise to vicarious liability, courts are essentially deciding when it would be better for the employer to bear the burden of the loss its employee has caused.”

Nikolas De Stefano, A Comparative Look at Vicarious Liability for Intentional Wrongs and Abuses of Power in Canadian Law (link).

In response, over time, the courts formulated another test to answer whether an employee’s wrongful conduct was said to fall within the “scope” of his or her employment. To that end, an employee’s wrongful conduct is said to fall within the scope of his or her employment if it is either:

1. An act authorized by the employer; or
2. An unauthorized act that is so connected with acts that the employer has authorized that they may rightly be regarded as “modes” — although improper modes — of doing what has been authorized (see: Canadian Pacific Railway Co. v. Lockhart, [1942] A.C. 591 at 599 (P.C.).

While rare, the first kind of conduct described above (i.e. an “authorized” wrongful act) is simple to prove for vicarious liability. However, the second more common kind of conduct at issue in vicarious liability litigation, an “unauthorized wrongful act”, will always be a challenge for a court. Indeed, judging by how complicated and subjective the below-noted test to prove vicarious liability for unauthorized wrongful acts is, it is no wonder it is such a challenge for courts.

The problem is that it is quite difficult to distinguish between an unauthorized “mode” of performing an authorized act that attracts liability, and an entirely independent “act” that does not. In such cases, how is a court to decide between the two alternatives? 

The Supreme Court of Canada, in 1999, set out to formulate a test to answer this conundrum in the context of a disturbing case in which the issue was whether a group care home was vicariously liable for its employee’s sexual abuse of resident children. 

In the result, the court formulated another test to determine if an employer is liable for an “unauthorized wrongful act”:

1. First, determine whether there are precedents which unambiguously determine on which side of the line between vicarious liability and no liability the case falls. 
2. Suppose prior cases do not clearly suggest a solution. In that case, the steps for a court to determine whether vicarious liability exists is to consider all four of these principles:
   1. They should openly confront the question of whether liability should flat out lie against the employer, rather than obscuring the decision beneath semantic discussions of “scope of employment” and “mode of conduct”.
   2. The fundamental question should be whether the wrongful act is sufficiently related to conduct authorized by the employer to justify the imposition of vicarious liability. Vicarious liability is generally appropriate where there is a significant connection between the creation or enhancement of a risk and the wrong that accrues therefrom, even if unrelated to the employer’s desires. Where this is so, vicarious liability will serve the policy considerations of a just remedy and deterrence. Incidental connections to the employment enterprise, like time and place (without more), will not suffice. Once engaged in a particular business, it is fair that an employer be made to pay the generally foreseeable costs of that business. In contrast, to impose liability for costs unrelated to the risk would effectively make the employer an involuntary insurer. 
   3. In determining the sufficiency of the connection between the employer’s creation or enhancement of the risk and the wrong complained of, subsidiary factors may be considered. These may vary with the nature of the case. When related to intentional torts, the relevant factors may include, but are not limited to, the following:
      1. the opportunity that the enterprise afforded the employee to abuse his or her power;
      2. the extent to which the wrongful act may have furthered the employer’s aims (and hence be more likely to have been committed by the employee);
      3. the extent to which the wrongful act was related to friction, confrontation or intimacy inherent in the employer’s enterprise;
      4. the extent of power conferred on the employee in relation to the victim;
      5. the vulnerability of potential victims to wrongful exercise of the employee’s power.

Applying this test to the facts in the above-mentioned Supreme Court of Canada case where the issue was whether a care home was vicariously liable for its employee’s child sexual abuse, the Court held the care home to be vicariously liable for the sexual misconduct of the employee. The Court found that:

the opportunity for intimate private situations and the parental relationship and power imposed on the employee created a special environment that nurtured the employee’s sexual abuse. The employer’s business created and fostered the risk that led to the ultimate harm. The abuse was not a mere accident of time and place, but the product of the special relationship of intimacy and respect the employer fostered, as well as the special opportunities for exploitation of that relationship it furnished. Indeed, it is difficult to imagine a job with a greater risk for child sexual abuse.

Bazley v. Curry, 1999 CanLII 692 (SCC), [1999] 2 SCR 534, https://canlii.ca/t/1fqlw

With respect to policy, arguably the most important factor in “unauthorized wrongful act” vicarious liability cases, the Court found that for a just remedy and the need for deterrence in this extremely vulnerable sector – group homes for vulnerable children – in deciding between the group home that created and managed the risk and the innocent victim, the group home should bear the loss. 

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Having articulated the law of vicarious liability in employment in Canada with an example of sexual abuse at a group home, employers in all industries should be mindful of any other kinds of acts of their employees that can attract towards them a liability. Everything from car accidents to negligence at the job site to assaults caused by employees in the realm of “work” can and have attracted damages awarded against employers in Canada.