Negligent Supervision & Hiring

Posted on October 18, 2011 by Rob Radcliff

 

The Case

FINRA recently fined Merrill Lynch $1 million over a Texas Ponzi scheme.  The case, which involved a San Antonio broker who was sentenced to prison was covered in a recent blog post in the Stockbroker Fraud blog. 

The Merrill broker persuaded investors to put money into a partnership and used at one point $1.4 million of those funds for personal spending and to support his house-flipping business.  FINRA alleged that Merrill failed to properly supervise the broker and failed to monitor the accounts that were used to operate the Ponzi scheme. 

The Cause of Action

Texas employers will always have to be aware of a potential cause of action against them for the wrongful or negligent acts of their employees.  The negligent hiring/negligent supervision is a catch-all claim where the Plaintiff alleges that the employer either (1) improperly screened the potential employee during the hiring process; or (2) failed to properly supervise the actions of the employee. 

The latter is very difficult to defend in terms of obtaining a summary judgment because there is always the argument that the employer could have done something a little bit more to prevent some type of damage to the plaintiff.  That said, strong pre-employment screening policies and supervision policies mitigate against these type of claims. 

 

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Social Media Screening (Potential Hires): Part 1

Posted on August 23, 2010 by Rob Radcliff

                    

Social media sites can give an employer/recruiter information about potential hires that you can't ask in an interview.  Take Facebook for instance, you can learn the following about me from my profile and posts:

  • Race/Ethnicity - just take a look at my picture;
  • Age - set forth in my profile;
  • Marital Status - set forth in my profile;
  • Children - take a look at my pictures; and
  • All the other information you can glean from pictures, status updates, etc.

The point is, there is an endless amount of information out there - much of which you cannot consider when making the decision to hire someone.  However, there is information that is not protected. 

What if there was a Facebook status update where the candidate stated they were fired from their last job for filing false reimbursement reports or the fact they have a non-compete agreement with their former employer?  These could be legitimate reasons not to hire someone.

So why shouldn't you incorporate social media searches as part of your company's hiring process?  A few reasons:

  1. A lawsuit over discriminatory hiring practices will almost certainly delve into whether social media screening is used as part of the hiring process;
  2. A Plaintiff could always allege, whether true or not, that information obtained from social media was used in the decision not to hire them;
  3. How do you document you didn't use something - hard to prove a negative;
  4. It's not possible to unlearn information obtained from social media - like the pregnancy status of a potential employee; and
  5. Is it really even worth it considering the potential liability that could arise?

It's always easy to say no.  Next week I'll examine the other side of the coin.  The short of it is, there is no right or wrong answer and each company's conclusion will depend on what information they are looking for and how they implement such a process.  There is no one size fits all answer.

 

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