In a recent development, New York employers might be confronted with an expanded scope of liability for negligent supervision. The basis of this development is centred upon whether an employer in New York can be charged for economic losses incurred by a party with no business connection to the employer, which are resultant from an employee’s unauthorized fraudulent scheming. This subject was recently put before the New York Court of Appeals. The court upheld this liability on a claim of negligent supervision and retention, despite opposition through a vigorous dissent.
The ruling made by the New York Court of Appeals offers a startling precedent, as it potentially broadens the responsibility businesses must assume in respect to their employees’ behaviour, even in cases where their activities have negative implications on parties with whom the employer has no established business relationship. This, in turn, influences the standard measures employed in employee supervision, and the outcome of their neglect.
For the complete details of the case and its implications on the precedent for negligent supervision, please refer to the article by Bond Schoeneck & King PLLC on JD Supra.