In most situations, employers are not liable for civil claims relating to criminal conduct by their employees because such actions are deemed to be outside the course and scope of their employment. Plaintiffs can get around this general rule by demonstrating that the employer ratified the employee’s behavior after the fact. In other words, the employer’s reaction to the alleged unlawful activity demonstrated its approval, or at least clear neglect, thereby making the employer liable for the ensuing damages suffered by the plaintiff.

Last week, the North Carolina Court of Appeals rejected a claim from a plaintiff that an employer ratified an employee’s alleged criminal conduct by failing to report it to the police. In Keller v. Deerfield Episcopal Retirement Cmty, Inc., the plaintiff was attorney-in-fact for a resident at an eldercare facility who suffered from advanced dementia. She alleged that a nursing assistant exposed himself to the resident in the course of providing care. The employer conducted an internal investigation and reported the alleged assault to the North Carolina Department of Health and Human Services. Both investigations concluded that there was insufficient evidence to corroborate the allegations.

The plaintiff sued the nursing assistant and his employer, alleging among other things that the employer ratified the employee’s behavior due to an inadequate response to the sexual assault report. The trial court granted the employer’s option for summary judgment, and a subsequent jury trial found the employee not liable for the claimed assault. The plaintiff appealed both decisions, including the dismissal of its ratification claim. (Parker Poe represented the employer, Deerfield, throughout the litigation, securing summary judgment at the trial court level and prevailing on appeal.)

The North Carolina Court of Appeals affirmed the dismissal, rejecting the plaintiff’s contention that its failure to report the alleged assault to law enforcement authorities constituted ratification. The court noted that after the allegation was received, the employer immediately suspended the employee, initiated an internal investigation and reported the matter to state regulatory authorities. It cooperated with all external investigations, and moved the employee even after concluding that it could not substantiate the allegations. This conduct demonstrated lack of ratification and justified the grant of summary judgment for the defendant. This decision demonstrates the value of a prompt and thorough response to claims of employee misconduct. Even if the employer fails to confirm the claims, demonstrating a serious response to them helps shield the company from later legal liability.