Direct and Vicarious Liability for a Business
In Pennsylvania, “negligence” exists when a person or company’s actions or inaction fall below the standard of care expected, leading to harm or injury.
A company, however, can only act through its agents: either management or workers. When it comes to making a company liable for “negligence,” this can occur in two ways.
The first involves the company’s direct negligence, this can include such things as cutting back on costs — or time spent training of workers — despite the harm it creates to the public, for example, from worker error.
The other, is vicarious liability for the worker’s negligence, sometimes called “respondeat superior,” or “master-servant liability,” but it’s all the same: the employer is automatically liable for the negligent acts of its employee, even if the employer was not otherwise negligent in hiring or supervising the employee, for example.
These concepts (direct and vicarious liability) sound similar, but each has certain benefits of tradeoff when it comes to proof in court.
Let’s talk about direct negligence, first.
1. Direct Negligence
Direct negligence is where a company decision — typically a managerial decision — causes foreseeable harm to another. Examples include:
- Negligent hiring of an agent — either an employee or independent contractor — who presents a danger upon hire, such as hiring an unqualified driver to deliver the company’s food or other products.
- Negligent supervision of an agent, failing to note the agent’s dangerous conduct until it’s too late;
- Failing to adequately train an agent, whose conduct causes resulting harm,
- Refusing to pay for adequate security for customers, who get mugged on the company property,
- Failing to pay for quality materials when manufacturing a product (that harms someone) and/or
- Failing to services its vehicles, equipment, or a premises (refusing to pay for snow or ice removal, causing a fall injury, for example), causing causing harm.
In each of these instances, the Plaintiff must prove that some act or omission on the part of the company (acting through management, most often) causes or contributes to the Plaintiff’s harm.
So let’s say a company — that delivers pizzas — accidentally hires a driver having a record for prior excessive speed charges. Then, the worker drives too fast on the job, causing a serious accident. Here, the employer will face liability for its direct negligence.
But what if, in the above example, the employer had screened the driver fully and the driving record was clean. In other words, the company did nothing wrong, but one of its agents drove too fast anyway, delivering pizzas, causing an injury and/or damage to property out of the blue?
When then?
2. Vicarious Liability or “Respondeat Superior”
In Pennsylvania, vicarious liability can make the employer automatically liable for the negligent actions of its employee.
The significant impact of this doctrine is that it removes the need to prove independent negligence on the part of the employer, which can often be a challenging task. For instance, to demonstrate negligent supervision, it must be shown that a specific error or failure on the employer’s part was a direct cause of the employee’s actions.
The Challenges of Proving Vicarious Liability in Court
The employer will be liable for the negligence of its employee when: (a) a true employer-employee relationship exists, and (b) the damage or injury occurs in the course and scope of his employment.
Sounds simple, right? Not necessarily.
Let’s look at each element above in some detail, to see what it means to prove vicarious liability in court.
a. Need to Prove an Employer-Employee Relationship
For a true “master-servant” or “employer-employee” relationship to exist to make a company liable, the company must have either (1) the right to control or (2) actual control over how the worker performs her job. In practice, this can be difficult to prove, especially if the worker has discretion as to how and when she performs her work. The courts look at certain factors:
- Is there a written agreement not only calling the worker an “independent contractor” (and thus not an employee), but also, giving the worker the right to self-control in terms of the manner of doing his work?
- Is the worker paid by hour or per task, with the latter suggesting more self-control?
- Does he report to the company daily?
- Does the company have the right to terminate the worker?
- Is it a skilled position where the worker necessarily makes nearly all decisions as to how to complete the work?
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Who owns the tools, equipment, and/or vehicle utilized by the worker?
These are questions of fact for the fact-finder in a case — judge or jury — to consider, meaning, don’t expect a court to rule on any of this early in the lawsuit.
b. Acting in Scope of Employment
OK, so you can prove that an employer-employee relationship existed at the time of your injury, which is a good start to put the employer on the hook for vicarious liability.
But you’re not there yet.
You must also prove that the worker had been acting in the course and scope of his employment, when causing your injury. This means, the worker’s conduct — at the time he caused your injuries or damages — must have been intended to benefit the employer’s business or were carried out with the employer’s authorization. As such, the employee is never acting in the “scope of employment” when:
- Traveling to work, as the work has not yet started furthering in the interests of the employer,
- The worker engages in frolic, which is a significant deviation from an employee’s work duties, undertaken primarily for their own personal benefit. Examples include “punching out” of work to use the company car to pick up the worker’s personal dry cleaning. (Compare this with “detour,” which is only a minor deviation.
Key Exception: Ostensible Agency
In PA, even if no employer-employee relationship exists, ostensible agency is where a company’s conduct (or lack thereof) makes another reasonably believe and rely on the assumption that the worker is the company’s employee,
So let’s say you go to UPMC hospital for treatment, and the doctor wearing a UPMC shirt treats you. Here, the doctor might be an independent contractor for UPMC, but how would you know otherwise? Or, let’s say you list your home through Coldwell Banker, but the agent — doing business under “Coldwell Banker” letterhead — is not an employee of Coldwell Banker. In these instances, you could possibly hold the company liable on an “ostensible agent” theory, against the company.
Examples of Vicarious Liability
Below are some examples of PA’s appellate courts address vicarious liability:
Rideshare or Uber Drivers. On July 24, 2020, the Pennsylvania Supreme Court held that Uber drivers are never independent contractors in Pennsylvania. The Court found that Uber drivers are, “as a matter of law,” controlled by Uber. The majority opinion provided that Uber drivers are not self-employed, but rather, that “Uber controlled and directed the performance of. . . services as a driver-for-hire.”
Franchisor’s Control Over Franchisee’s Employee. In the Domino’s case, the Pennsylvania Superior Court affirmed that Domino’s was vicariously liable for the negligence of a franchisee’s employee, a delivery driver. The court looked at the franchisor’s level of control over the franchisee’s operations.
The Wording of Franchise Agreements. A franchise agreement will often state that the franchisee maintains independence from the franchisor. However, Pennsylvania courts look closely at the wording of franchise agreements to see how much control actually exists. See Coryell v. Morris. There, in 2025, PA’s Superior Court found sufficient control to make the franchisor responsible for the franchisees negligence.
Exemplary Damages
An employer whose conduct is reckless — beyond mere negligence — can be liable for punitive damages. In addition, in Pennsylvania, vicarious liability exists on the part of an employer for the reckless conduct of an employee. See Loughman v. Consol-Pa. Coal Co., 6 F.3d 88, 101 (3d Cir. 1993).
Key Strategy
The key is to plead as many claims as you can, on the Plaintiff-side, to see how much survives objection, if only to trigger liability insurance for all entities sued, even if there is not a high probability of recovery on all claims.
