Liability of Employment Agencies for Negligence or Violation of Statute

The employment agency has a contractual relationship with the prospective employees, which make the agency duty bound to act in the best interests of the applicants.   Thus, in the normal course, an agency’s failure to foresee some danger to the applicants and its ability to exercise some control over the employers it makes available to them, will render the agency liable for damages.  The agency will be liable for negligence if it fails to exercise the duty of care.

In order to recover on a negligence claim, a plaintiff must establish (1) a legal duty owed by the defendant to the plaintiff to protect the latter against injury; (2) a breach of that duty; and (3) damages proximately resulting from the breach[i].  In deciding whether to impose a duty on a particular defendant, courts weigh the risk, foreseeability, and likelihood of injury against the social utility of the actor’s conduct, the magnitude of the burden of guarding against the injury, and the consequences of placing that burden on the actor[ii].

The basis of liability under the doctrine of negligent hiring is the master’s own negligence in hiring or retaining in his employ an incompetent servant whom the master knows, or by the exercise of reasonable care should have known, was incompetent or unfit, thereby creating an unreasonable risk of harm to others.

An employer owes a duty to its other employees and to the general public to ascertain the qualifications and competence of the employees it hires, especially when the employees are engaged in occupations that require skill or experience and that could be hazardous to the safety of others[iii].  Hence, courts stipulate that the employment agencies must have a “bona fide job order” before they refer any person for a job interview[iv].

Courts generally consider the risk, foreseeability, and likelihood of injury against the social utility of the actor’s conduct, the magnitude of the burden of guarding against the injury, whether one party would generally have superior knowledge of the risk or a right to control the actor who caused the harm.  Of these, the foremost consideration is the foreseeability of the risk[v].  However, the duty of care is not absolute and hence a person has no legal duty to protect another from the criminal acts of a third person or to control the conduct of another[vi].

To state a claim based on negligent misrepresentation, the plaintiff must allege that the defendant is in the business of supplying information for the guidance of others and that the defendant provided information for guidance in the plaintiff’s business dealings that constituted a misrepresentation.

Thus, negligent misrepresentation involves a breach of the duty to use due care in obtaining and communicating information upon which others may reasonably be expected to rely in the conduct of their economic affairs[vii].  Thus, if an employment agency misrepresents to an employer that a particular job seeker is well qualified for a particular position, the agency is liable in tort for damages suffered by the employer that are proximately caused by such misrepresentation[viii].  Such an employment agency may be held liable for injury resulting from its violation of a statute generally prohibiting deceptive business practices.

[i] Praesel v. Johnson, 967 S.W.2d 391 (Tex. 1998)

[ii] Wise v. Complete Staffing Servs., Inc., 56 S.W.3d 900, 902 (Tex. App. Texarkana 2001)

[iii] Wise, 56 S.W.3d 900

[iv] Keck v. American Employment Agency, Inc., 279 Ark. 294 (Ark. 1983)

[v] El Chico Corp. v. Poole, 732 S.W.2d 306 (Tex. 1987)

[vi] Centeq Realty v. Siegler, 899 S.W.2d 195 (Tex. 1995)

[vii] Stewart v. Thrasher, 242 Ill. App. 3d 10 (Ill. App. Ct. 4th Dist. 1993), Fox Assocs. v. Robert Half Int’l, 334 Ill. App. 3d 90, 95 (Ill. App. Ct. 1st Dist. 2002)

[viii] Accountemps v. Shelton Laundry Co., 2002 WL 959909 (Conn. Super. Ct. 2002)


Inside Liability of Employment Agencies for Negligence or Violation of Statute