F. Vicarious Liability

Author:Philip H. Osborne
Profession:Faculty of Law. The University of Manitoba

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Vicarious liability is not a discrete tort. It describes the responsibility that one person may have for the torts of another because of the relationship between them. Vicarious liability is described as strict because it requires no proof of personal wrongdoing by the person subject to it. The establishment of the requisite relationship between the defendant and the tortfeasor is the key to vicarious liability. It does not displace the personal liability of the tortfeasor. It merely provides the plaintiff with an alternative defendant who is more likely to be solvent, to have liability insurance, or to be able to spread the loss in some other way. The most common relationship giving rise to vicarious liability is that of master and servant or, in more modern language, that of employer and employee. Vicarious liability also applies to the relationship of principal and agent. These two relationships may be contrasted with those of employer and independent contractor, parent and child, bailor and bailee, and trustee and beneficiary, which do not normally give rise to vicarious liability.

1) Employer and Employee (Master and Servant)

An employer is strictly liable for the torts of her employees committed within the course of their employment. The vicarious liability of an employer has been justified on two broad policy grounds: the provision of a just and practical remedy and the deterrence of future harm.44

The imposition of liability is just because the employer has created an enterprise which creates a risk of employee wrongdoing. Those risks should be borne by the enterprise. The imposition of liability is practical because the employer normally has deeper pockets than the employee and/or is in a better position to spread the loss through liability insurance or the pricing of goods and services. Vicarious liability serves

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a deterrent function by transferring the loss to employers and thereby encouraging them to adopt accident prevention measures including risk management and to improve methods of selecting, training, and supervising workers.

a) Employees and Independent Contractors

The primary test to distinguish an employee from an independent contractor is the control test.45An employee is a person who is under the direct control and supervision of the employer who is empowered to tell the employee how, when, and where to do the work. Waiters, retail clerks, construction workers, agricultural workers, industrial workers, and bus drivers are typically employees. Independent contractors are not under the employer’s control. They are hired to complete a particular task and are controlled by the terms of their contract with the employer, not by the personal instructions of the employer. Plumbers, accountants, automobile repairers, builders, and painters typically operate as independent contractors. The control test is not, however, easy to apply in a modern economy. It is, for example, difficult to accommodate professional and highly skilled employees within the control test. Their skills and expertise may be far superior to those of their employer and it is unrealistic to suggest that the employer can direct them as to how to do their work. Furthermore, those who are conventionally thought of as independent contractors may, under the terms of their contract of service, be subject to very close control by the person who hires them. The control test has therefore been supplemented by other tests. The "entrepreneur test" amplifies the factors to be taken into account in addition to control, including consideration of the ownership of tools, the chance of profit, and the risk of loss. Independent contractors conventionally own their own tools and their ultimate reward depends on the success of their business.46The "organization test" concentrates on the degree to which the worker is integrated into the employer’s business enterprise. An employee is commonly integrated into the employer’s business. An independent contractor is usually a discrete and independent business.47The "enterprise test" takes a more functional approach imposing vicarious liability where the employer controls the activities of the worker, where he is in a position to reduce the loss,

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where he benefits from the activities of the worker, and where the true cost of the product or service should fairly be allocated to the enterprise providing it.48The Supreme Court reviewed each of these approaches in 671122 Ontario Ltd. v. Sagaz Industries Canada Inc.49It concluded that there was no one conclusive test. The Court called for a close examination of the total relationship and an approach which synthesized many of the factors found in the various nominate tests. Justice Major stated:

The central question is whether the person who has been engaged to perform the services is performing them as a person in business on his own account [or on account of his employer]. In making this determination, the level of control the employer has over the worker’s activities will always be a factor. However, other factors to consider include whether the worker provides his or her own equipment, whether the worker hires his or her own helpers, the degree of financial risk taken by the worker, the degree of responsibility for investment and management held by the worker, and the worker’s opportunity for profit in the performance of his or her tasks.50Justice Major also cautioned that the relative weight given to these and other relevant factors would depend upon the facts and circumstances of each case.51The approach outlined in Sagaz has not been restricted to commercial entities. In K.L.B. v. British Columbia,52for example, a majority of the Supreme Court concluded that foster parents are not employees of the provincial government. A majority of the Court noted that foster parents enjoy a considerable degree of independence and discretion in meeting the goals of foster care and concluded that the government did not exercise sufficient control over the daily activities of the foster parents for them to be regarded as employees. They were acting on their own account not on account of the government.

Occasionally the courts have had to address the problem of the "borrowed servant." It arises where an employer allows another business to second temporarily one of its employees. There is a factual presumption that the general employer remains vicariously liable for the torts of the borrowed servant but ultimately it is a question of who has

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control of the employee. Relevant factors in this determination include the nature and duration of the secondment, who has the power of dismissal, who pays the employee, and whose equipment and tools are being used to do the work. The leading case is Mersey Docks & Harbour Board v. Coggins & Griffiths (Liverpool) Ltd.,53where the defendant hired out a crane and its operator to a stevedoring company involved in unloading ships. The House of Lords adopted the control test and concluded that the operator was not an employee of the stevedoring company. The stevedoring company could direct the operator of the crane to perform certain tasks but it did not have any power over the manner in which the crane was operated or over the operator himself.54

The problem of the borrowed servant is to some degree a product of the conventional assumption that an employee can have only one employer. An employee had, therefore, to be assigned to either the general or the temporary employer. The Supreme Court has, however, recently recognized that an employee may have more than one employer. In Blackwater v. Plint55both the federal government and a church were found to be the joint employers of an employee who abused a student in a residential school run by them. Consequently, if both the general employer and the temporary employer have some degree of control over the temporary employee it will no longer be necessary to make a choice between them. The borrowed servant issue will be restricted to the less likely scenario of one or the other having full control over the employee at the time of her wrongful act.

Remuneration is not an essential element of an employment relationship for the purposes of vicarious liability. Volunteers working for charitable organizations, public institutions, and sporting associations may be employees. Volunteers are normally under the direct supervision and control of the employer and are acting on account of the organization rather than on their own account.

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Drawing the distinction between an employee and an independent contractor will continue to challenge the Courts. The continuing reorganization of the economy exacerbates the difficulties. The long-term employment relationship epitomizing ongoing and personal control of workers is giving way to contracting out, term positions, casual work, and employment relationships where employer and worker are linked only by computer. Future innovative hiring and work relationships will present increasing challenges to the traditional concepts. It is likely, however, that the courts will mould the principles of vicarious liability to these new relationships because the strong policy factors that support them are unlikely to diminish.

b) The Course of Employment

An employer is not liable for all the torts of its employees. There must be some connection between the wrongdoing and the employment relationship. This requirement is captured by the rule that the tort must have been committed in the course of employment. The employer is not, therefore, liable for...

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