Usually when an individual commits a tort or violates a contract, that individual is solely responsible for his or her actions. In employment contexts, however, complicated issues of employer and employee liability arise. For example, perhaps an employee is sued for following employer policies, or for an accident that happens while on the job.
In these situations, employers are sometimes required to defend lawsuits on behalf of employees and even pay their costs for attorney fees. This is known as indemnification.
Indemnification in California
Under California law, employers must indemnify their employees, and defend them in court, if the lawsuit against the employee is brought for actions that occurred in the scope of the employee’s employment. Under the California Labor Code, this means that employers must pay for an employee’s lawsuit expenses where the lawsuit was a result of the employee doing his job or following the orders of his superiors.
California’s laws are particularly strong in protecting the rights of employees to indemnification. Indemnity cannot be waived by contract and an employer who attempts to deny an employee the right to indemnity can face a lawsuit for interfering with the employee’s economic rights.
What Constitutes The Scope of Employment?
California employees are only entitled to indemnification when they are acting within the scope of their employment. While the scope of employment can be broad, it does not mean any action that occurs during a work day. For instance, if an employee has a car accident while off on a lunch date with a friend, that will not require indemnification.
Scope of employment is generally defined as any actions taken as a part of an employee discharging his or her duties as required by the employer, or any additional action taken specifically at the behest of the employer. Thus, if an employee doesn’t typically deliver goods to customers but is asked to do so by an employer, this would still fall within the scope of employment.
It is important to note that indemnification does not apply to independent contractors. It is a right that is only available to employees in California, even though independent contractors may work on behalf of an employee. This can have significant ramifications for independent contractors who are sued while doing work on behalf of another.
But What About Unlawful Conduct?
One exception to the rule of employer indemnification arises when employees engage in conduct that is unlawful and they know it is unlawful. In these circumstances, an employer is not required to defend its employee or pay legal bills.
The most important aspect of this exception is determining whether the employee knew his or her conduct was unlawful. If an employer asks an employee to deposit checks at a bank for purposes of money laundering, but the employee does not know that he or she is engaging in money laundering, this is not an exception to indemnification.
By contrast, if an employee is dealing drugs at work and is arrested for doing so, he or she obviously knows that the conduct is unlawful and the employer is not obligated to indemnify.
California Labor Attorneys Helping You Determine Your Indemnification Rights
If you are an employee who has recently been sued on the basis of actions that occurred during your time at work, and were done at the direction of your employer, you may be entitled to indemnification. Likewise, if you are an employer whose employees are facing a lawsuit, determining your indemnification obligations is of the utmost importance.
At CKB Vienna LLP, our employment law attorneys can help you evaluate whether the lawsuits arise from the scope of employment and, if so, if any special exceptions apply. For more information, contact us online or at 909-980-1040.