A California employer is liable for negligent hiring or retention only when it knew or should have known that the employee posed a particular risk, and that risk caused the harm. The claim is about the company’s own conduct, not the employee’s. It usually follows an assault or a crash by an employee with a record or prior complaints. The employer’s defenses usually turn on what it actually knew, when the harm happened, and whether it admits responsibility for the employee’s conduct.
What does a plaintiff have to prove?
Knowledge of a specific risk, and harm from that risk. In Phillips v. TLC Plumbing, Inc. (2009) 172 Cal.App.4th 1133, the Court of Appeal stated that negligence liability attaches if the employer “knew or should have known that hiring the employee created a particular risk or hazard and that particular harm materializes.”
The court also explained that the claim is “one of direct liability for negligence, not vicarious liability.” That distinction matters. A plaintiff who can’t hold the company vicariously liable, because the employee’s act fell outside the scope of employment, will often plead negligent hiring as a second route to the company’s insurance and assets.
The particular-risk requirement is where most defenses start. A prior conviction for a financial crime doesn’t make a later assault foreseeable. A complaint about rudeness doesn’t put an employer on notice of violence. The plaintiff has to connect what the company knew to the harm that followed.
Is the employer liable for what a former employee does?
Generally not, once the employment has ended. The plaintiff in Phillips alleged that a plumbing company’s former repairman met a customer on a service call and later killed her, after the company had fired him. The court affirmed summary judgment for the company.
It held that “an employer does not owe a plaintiff a duty of care in a negligent hiring and retention action for an injury or other harm inflicted by a former employee on the plaintiff even though that former employee, as in this case, initially met the plaintiff while employed by the employer.” The court reasoned that “the employer-employee relationship ends on termination.”
That holding gives employers a clean defense when the harm happened after separation. It also means the termination date, and the proof of it, can decide the case. Final paychecks, system access logs, and the return of keys or vehicles all fix that date.
Should the employer admit the employee acted within the scope of employment?
Sometimes, and it can take the negligent hiring evidence out of the trial. In Diaz v. Carcamo (2011) 51 Cal.4th 1148, the Supreme Court of California addressed a trucking company sued for its driver’s accident and for negligently hiring and retaining him.
The court held that “when a plaintiff alleges a negligent entrustment or hiring cause of action against the employer and the employer admits vicarious liability for its employee’s negligent driving, the universe of defendants who can be held responsible for the plaintiff’s damages is reduced by one.” It added that “the employer would not be mentioned on the special verdict form.”
The practical effect can be large. An admission of vicarious liability can keep the employee’s prior record and the company’s hiring file away from the jury on the negligence claim, since the employer’s liability already tracks the employee’s. The trade-off is giving up the scope-of-employment defense. That choice belongs early in the case, after counsel weighs the employee’s fault, the strength of the scope defense, and whether punitive damages are in play. Diaz arose from a vehicle accident, so how far its reasoning reaches beyond driving cases is a question to analyze on the facts.
Does insurance cover negligent hiring claims?
Often, even when the employee’s act was intentional. In Liberty Surplus Ins. Corp. v. Ledesma & Meyer Construction Co. (2018) 5 Cal.5th 216, the Supreme Court answered whether a suit against an employer “for the negligent hiring, retention, and supervision of an employee who intentionally injured that third party” alleges an “occurrence” under a commercial general liability policy. The court said the answer depends on whether the injury can be considered “accidental,” and concluded “that it can.”
An employer served with one of these lawsuits should tender it to every policy that might respond, including the general liability policy, and not only the employment practices policy. A late tender can cost the company coverage it would otherwise have.
When the injured person is a coworker, where does the claim belong?
Often in workers’ compensation. Under Labor Code section 3602, where the conditions of compensation are met, “the right to recover compensation is, except as specifically provided in this section and Sections 3706 and 4558, the sole and exclusive remedy of the employee or his or her dependents against the employer.”
A negligent hiring claim filed by an employee who was hurt by a coworker on the job is a natural target for a demurrer or summary judgment motion on exclusivity grounds. Statutory exceptions apply, and claims under the Fair Employment and Housing Act follow different rules, so the analysis depends on what the employee pleads.
How much screening is enough?
Screening that’s lawful and matched to the job. A company can’t avoid one problem by creating another. Under the Fair Chance Act, Government Code section 12952 makes it unlawful for an employer with five or more employees “To inquire into or consider the conviction history of the applicant, including any inquiry about conviction history on any employment application, until after the employer has made a conditional offer of employment to the applicant.”
The safer course is a written screening policy that ties background checks to the risks of each role, applies them after a conditional offer, and documents the individualized assessment the law requires. A company that sends technicians into customers’ homes has more reason to screen than one hiring for back-office work, and juries see the difference. What hurts employers in these cases is learning of a red flag and doing nothing with it.
How do negligent hiring defenses compare?
| Scenario | Exposure | Where the defense starts |
|---|---|---|
| Harm by a current employee with no known history | Low on negligent hiring | No knowledge of a particular risk |
| Harm by an employee after prior complaints of similar conduct | High | Whether the earlier complaints matched the harm and how the company responded |
| Harm by a former employee after termination | Low | Phillips rule on posttermination conduct and proof of the termination date |
| Vehicle accident by an employee in the scope of employment | Moderate | Whether to admit vicarious liability under Diaz |
| Coworker injured by another employee on the job | Depends on the claim | Workers’ compensation exclusivity under Lab. Code § 3602 |
What should a company do once a negligent hiring claim is filed?
These cases are about what the company knew and when. Lock down that record first.
- Put a litigation hold on the employee’s application, background check results, personnel file, discipline history, and prior complaints, along with training records and any messages about the employee’s conduct.
- Calendar the response date on the summons, tender the claim to every insurer that might respond, and check for an arbitration agreement and an employment practices liability (EPLI) policy with notice requirements.
- Identify the managers who hired, supervised, or received complaints about the employee, and keep anyone from discussing the incident with the employee or the injured person outside counsel’s guidance.
- Gather the documents that fix the dates, including the hire date, every complaint and the response to it, the termination paperwork, and the incident records.
- Talk to a lawyer before responding to the complaint, deciding whether to admit scope of employment, or discussing settlement.
Businesses looking for employment defense for California service companies can review the firm’s practice page.
Negligent hiring questions from California employers
Do we have to run a background check on every hire?
California doesn’t impose a general duty to run one on every hire, and the Fair Chance Act limits when and how conviction history can be used. The question in litigation is whether the company acted reasonably given the job’s risks. Roles with access to homes, children, money, or vehicles call for more screening. Whatever the policy is, follow it consistently, since a skipped check on one hire looks worse than a narrower policy applied to everyone.
Is a negligent supervision claim different from negligent hiring?
The theory is similar, but the timing differs. Negligent hiring looks at what the company knew or should have known at the start. Negligent supervision and retention look at what it learned during employment and what it did next. Most complaints plead all three. The defense is usually strongest when the record shows the company investigated each complaint and acted in proportion to what it found.
Can the employee who caused the harm be named too?
Yes. Plaintiffs usually sue both the employee and the employer. Their interests can diverge, most often on whether the conduct was within the scope of employment, so separate counsel is often needed. The company should also review whether it has an indemnity obligation to the employee before deciding how to respond.
Does firing the employee after the incident help or hurt?
It doesn’t erase liability for what already happened, and it isn’t an admission either. Discipline that follows a fair investigation shows the company took the incident seriously. Document the reasons and the investigation, and make the decision with counsel if a lawsuit or claim has already arrived.
If a negligent hiring claim reaches your company
If your company has been sued for negligent hiring, supervision, or retention after an employee’s misconduct, what the company knew before the incident usually decides how much of the claim is real. Rosenberger + Kawabata represents employers defending employment lawsuits and claims through its business litigation practice, including negligent hiring and retention claims. Contact Rosenberger + Kawabata online for a confidential consultation, or call (310) 894-6921.
Sources
The statutes are Government Code section 12952 and Labor Code section 3602. The decisions are Phillips v. TLC Plumbing, Inc. (2009) 172 Cal.App.4th 1133, a published decision of the California Court of Appeal, and two decisions of the Supreme Court of California, Diaz v. Carcamo (2011) 51 Cal.4th 1148 and Liberty Surplus Ins. Corp. v. Ledesma & Meyer Construction Co. (2018) 5 Cal.5th 216.
This post is general information about California employment law as of November 7, 2026. It is not legal advice, and reading it does not create an attorney-client relationship. Employment statutes, regulations, and court decisions change often, and the outcome of any claim depends on its facts. Past results do not guarantee future outcomes.