Negligent hiring is a serious concern for companies across Canada. These lawsuits can hit your company hard financially and reputation-wise. The concept? If your company skips crucial due diligence in hiring and that decision leads to someone being harmed, you could face a legal nightmare. 

But before you panic, know this: you can protect your organization from potential lawsuits with proactive measures.

Keep reading to learn what negligent hiring really means, real-life examples of lawsuits in Canada, and practical tips on using background checks to protect your company against risk.

What Exactly is Negligent Hiring?

Negligent hiring happens when a company fails to perform due diligence during the hiring process, and that lack of action directly leads to harm or damages. Let’s say you hire someone without a proper background check, and that employee later engages in behaviour that hurts someone — your company could be held liable.

Sounds serious? It is. But it’s also preventable.

The Legal Risks You Might Face

The stakes are high in Canada. Negligent hiring claims can result in significant financial losses, not to mention a hit to your brand’s reputation. Canada’s legal landscape places a duty of care on employers to ensure they aren’t putting the public, clients, or other employees at risk by hiring someone who poses a potential threat.

Here are some risks you might face with negligent hiring:

• Costly lawsuits: If you hire someone who causes harm because you didn’t do a proper background check, your company could pay substantial legal fees or settlements.
• Bad reputation: A single bad hire can ruin your company’s image, making it hard for you to attract new clients or talented employees. Once the damage is done, it’s tough to bounce back.
• Safety issues: Hiring the wrong person can put your team and workplace at risk — anything from workplace accidents to, in the worst cases, violence or threats.
• Lost business: If a negligent hire mistreats a client or partner, you could lose important business relationships, hurting your company’s growth and reputation.
• Lower employee morale: If your staff doesn’t feel safe or has to deal with a problematic coworker, it can seriously impact team spirit and lead to higher turnover.
• Data theft or leaks: A poorly vetted employee might have access to sensitive information, which could be stolen or leaked, risking your company’s trade secrets or confidential data.
• Wasted resources: Dealing with the fallout from a negligent hire can waste a lot of time and energy you could spend elsewhere.
• Compliance issues: If you skip a necessary background check, you could face fines or penalties for breaking the rules.

Clarica Life Insurance Case

Clarica Life Insurance hired an agent who stole funds from a customer during their employment. Before hiring the agent, Clarica had been warned by one of the agent’s former employers about previous misconduct, which included stealing and cashing a fraudulent cheque. 

Despite knowing this, the company failed to perform background checks. The result? Clarica was liable for the plaintiff's $260,000 loss, other financial penalties, brand damage, and a major loss of public trust.

Balancing Perspectives on Hiring Individuals with Criminal Records

Employers often have mixed feelings about hiring candidates with criminal records. Some are actively inclusive, looking for a diversified talent pool, benefits from government incentives, or higher employee loyalty.

Others are more hesitant and worried about risks to workplace safety and the potential for negligent hiring lawsuits.

Regardless of your stance, you must weigh these benefits against the potential risks, especially in positions that involve sensitive information or direct client interaction. Keep your hiring process objective and consistent, and as long as you follow the rules, you can cover your assets. 

C.O. vs Williamson and Trillium Lakes District School Board

In this case, a student teacher was hired by Ontario’s Trillium Lakes District school board despite having a previous conviction for sexual offences against minors. The school board didn’t perform a thorough background check, allowing the teacher to interact with students. 

When the teacher reoffended, the school board faced a lawsuit for negligent hiring. The court found that the school board's failure to conduct appropriate background screening and to consider the candidate’s criminal history constituted negligence. The Trillium Lakes District School Board in Lindsay was found responsible for the sexual assaults committed by the teacher (Royce Galon Williamson) against a student. They were ordered to pay damages exceeding $500,000 due to this ruling.

The Risks of Ignoring Background Screening

Wondering why business owners fear negligent hiring lawsuits? Here are the main reasons companies end up in court:

• Inadequate background checks: When employers neglect to check a candidate’s criminal history or validate their qualifications, it’s a major red flag.
• Inconsistent hiring practices: Applying policies unevenly makes it challenging to defend against claims.
• Credential missteps: Failing to verify education or licenses can spell trouble if a worker turns out to be unqualified.
• Ignoring red flags: Ignoring clear warning signs, like past incidents of violence or fraud, is a significant liability.
• Missing written policies: You need clear, written procedures outlining how you vet candidates. Without them, you’ll have a hard time proving you acted responsibly.
• Job requirements mismatch: Hiring someone who doesn’t meet the job's criteria — especially if they later cause harm — can backfire badly.

Campbell vs Suncor Energy Inc.

Suncor Energy Inc. hired an employee with a history of substance abuse issues without adequate screening. The individual later caused a workplace accident due to impaired judgment. 

The court ruled in favour of the injured party, finding that Suncor was responsible for conducting improper background checks and not verifying the candidate's history before hiring. This case emphasizes the dire importance of assessing potential risks associated with hiring individuals who may pose safety concerns due to past behaviours.

How Background Checks Can Shield Your Company

Employers use background checks to mitigate risk and learn about how a candidate will fit the role and company culture. Here's how thorough background screening works to your advantage:

• Customized screening: To keep things fair, you can tailor the background check to match the position’s demands rather than the individual's.
• Quality of hire: Verifying qualifications, work history, and education ensures you’re hiring someone who can excel in the role.
• Protect your assets: Honesty and integrity checks can safeguard your company’s sensitive information and valuable assets.
• Compliance: Some roles have regulatory requirements. Background checks ensure you remain compliant with these standards.   
• Workplace trust: When employees know you’ve vetted their colleagues, it builds trust and a healthy work culture.
• Legal defence: A consistent, documented background check process makes your case more defendable if disputes arise over a hiring decision.
• Violence prevention: Screening for past behaviour issues can help keep your work environment safe and secure.

Fitzgerald vs The City of Calgary 

This case involved the City of Calgary hiring a firefighter who had a history of violent behaviour. Despite warnings from previous employers regarding the firefighter's conduct, Calgary failed to do a comprehensive background check. 

When the firefighter assaulted a member of the public during a call, the City was held liable for negligent hiring, as they had not taken the necessary steps to ensure the candidate was fit for the role. This case highlights the critical importance of reviewing past conduct and adhering to established hiring protocols.

Actionable Tips to Prevent Negligent Hiring

Want to avoid a similar fate? Here’s what you can do:

Always Perform a Background Check

Know your applicant’s history. Use a reputable service that specializes in background checks in Canada. Make sure it covers employment verification, criminal record checks, and education verification.

Know What to Look For in a Background Check

A thorough hiring process begins with an even more thorough background check that includes:

• Canadian criminal record check: Ensure that the person doesn’t have a history that makes them a risk for the role.
• Employment history: Verify past jobs and responsibilities to confirm experience.
• Reference checks: Contact previous employers to get feedback on performance and behaviour.

Tip: Some people wonder if past employers can give bad references. To better understand, check out this post from Hire Performance: Can an Employer Give a Bad Reference in Canada?

Standardize Your Hiring Process

Create a checklist for background screening. This strategy keeps your hiring process consistent and helps you follow each step every.single.time. Being consistent shows your commitment to responsible hiring practices, which could be your best defence in court if a lawsuit arises.

Don’t Just Focus on Criminal Checks

Sure, a criminal record check in Canada is crucial, but don't stop there. A well-rounded background check should include:

• Credit Checks (if the position involves handling finances)
• Education Verification (for roles requiring specific qualifications)
• Social Media Screening (social media can provide insights, but tread carefully and comply with privacy laws)
• Privacy Laws and Compliance (did you know that mishandling personal information during a background check can lead to legal trouble? Canadian employers must follow strict guidelines. Make sure your background check for companies complies with all relevant privacy legislation)

Key Points to Remember:

• Always get written consent from candidates before performing any background checks.
• Be transparent about what you’re checking and why.
• Safeguard all the information you collect to prevent unauthorized access.
• Document EVERYTHING.

Negligent Hiring? Not on Our Watch! Let’s Get Your Applicants Screened

Negligent hiring lawsuits are a real threat, but they don’t have to be your reality. Take action, be proactive, and invest in proper background screening to keep your company and employees safe.

Worried about the complexity of all this legal stuff? We’ve got your back. Hire Performance makes background checks easy, thorough, and compliant so you can hire with confidence.

We specialize in comprehensive and compliant background checks in Canada. We cover everything from criminal record checks to employment and education verifications to reduce risk and streamline hiring processes.

Request a Demo Today!