Termination with cause liability risk to employer

[Trisha Drew]

#97355

Forum: Private

Good morning, I am requesting your insight on a recent termination with cause. We had an employee make inappropriate comments to a customer of a sexual nature. The customer called the police. The employee admitted (verbally) to the comments made (to his Supervisor when confronted). In short, we terminated the employee with cause. I am unaware of any charges laid by the police on the individual. We spoke to the customer and apologized. I would appreciate your insight on liability risk to the employer in this type of situation. Thank you.

[Haley O’Halloran]

#97357

This is a serious and sensitive situation, and it sounds like your organization acted promptly and appropriately. Here’s an overview of the key liability considerations and best practices following a termination for cause related to sexual comments toward a customer.

Employer Liability Exposure
a. Vicarious Liability

Employers can sometimes be held vicariously liable for an employee’s misconduct toward a customer if the behavior occurred “in the course of employment.”

If the inappropriate comments were made while the employee was performing work duties or interacting with the customer as part of their job, the employer could face potential exposure if the customer pursued a civil claim (e.g., for emotional distress, harassment, or negligence in hiring/supervision).

However, your swift termination, acknowledgment of the incident, and apology to the customer are strong mitigating factors showing due diligence and prompt corrective action.

b. Negligent Hiring or Retention

If the employee had a prior history of similar conduct or red flags that were ignored, an employer could be found negligent in hiring or retaining them.

If this was a first incident and the organization had no prior knowledge or reason to suspect such behavior, liability is low.

c. Human Rights and Occupational Safety

Although this incident primarily involves a customer, not a co-worker, it still intersects with your obligations under:

Human Rights legislation (to maintain a harassment-free service environment); and

Occupational Health and Safety legislation (to prevent workplace violence and harassment).

Your internal policies should reflect these duties — ensuring employees understand that harassment of anyone (customer, coworker, or vendor) is strictly prohibited.

Criminal and Civil Risk to the Employee

Since the police were called, any charges would be directed at the employee, not the employer.

If no charges have been laid, the police likely found insufficient grounds for criminal harassment or indecent communication.

Nonetheless, your internal disciplinary action (termination with cause) is independent of criminal proceedings and justified by the employee’s admitted conduct and breach of policy.

Strengthening the Employer’s Position

To further reduce risk and demonstrate due diligence:

Document everything — incident report, customer complaint, employee admission, investigation notes, termination letter, and apology to the customer.

Ensure your workplace harassment policy explicitly covers inappropriate conduct toward non-employees (e.g., clients, contractors, the public).

Conduct refresher training on workplace harassment and respectful conduct.

Follow up with the customer to confirm that they feel the issue has been resolved and that your organization has taken preventive steps.

Avoid disclosing details of the termination to other staff beyond what’s necessary (e.g., “the employee is no longer with the company”).

Recommendation
You’ve handled this situation appropriately: swift investigation, termination for cause, and apology to the affected customer. To further protect the organization, ensure policies and documentation align with your jurisdiction’s occupational health and safety and human rights requirements. If you haven’t already, it may be worthwhile to have legal counsel review the termination letter and incident documentation to confirm that your termination for cause aligns with provincial employment law standards.

I hope this helps and best of luck.

-HRInsider Staff

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