Negligent Hiring: It Can Cost Your Company Millions

March 19, 2021

By Charlotte Spencer

Sometimes the paperwork involved in bringing on a new hire can seem like a mere formality that you don’t want to spend time and money on. Recent court cases, however, demonstrate just how risky it can be to skip over proper background checking and other such formalities. How much can failing to do a sufficient background check on a new hire cost your company? It could potentially cost you millions of dollars.

What Happened?

On February 8, 2011 a wrong-way driver caused a multi-vehicle crash on an interstate highway in Indiana. Mr. Kallis drove northbound in the southbound lanes of I-65 causing other vehicles to slow and swerve to avoid him. Mr. Denton, unable to avoid other vehicles who were slowing and changing course to avoid the wrong-way driver, crashed and was propelled into the middle of the highway. Mr. Denton was badly injured when a semi-truck driven by Mr. Johnson for Universal Am-Can, Ltd. (UACL) rear-ended him, driving him into another vehicle. Although Mr. Johnson was not the cause of the initial accident which caused the chain reaction, he failed to respond to the situation properly, and so caused the injury. Denton alleged that Johnson had failed to keep a proper look out and failed to reduce speed as necessary. Denton ultimately settled with Mr. Kallis’s estate, for the initial accident, which Mr. Kallis caused. He however went on to sue several other parties, including Universal Am-Can, Johnson’s employer, for the role that Johnson played in the subsequent crash. This article focuses on the litigation between the Dentons and Universal Am-Can.

What does this all have to do with background checking potential employees? Due to their failure to properly enforce their own background check policies regarding Mr. Johnson Universal Am-Can recently lost a $54 million verdict in the subsequent lawsuit. That’s not to mention the legal fees they’ve been paying over the past decade since this all started. Universal Am-Can later got plaintiffs to accept a settlement instead of the verdict by offering $36 million in cash in addition to the $7 million they had already paid the plaintiffs before. Although some of this settlement was covered by insurance the majority of it was not.

How Could Universal Am-Can Have Protected Themselves From This?

The key to avoiding such a costly lawsuit is to do sufficient background checks on employees, and then enforce rules barring hiring people with records that raise a concern. In this case, the defendant did a background check, but hired him even though they knew that he had an alarming background and had lied on his application.

At the time of the crash Mr. Johnson was driving on a suspended license, certainly something which proper checking and monitoring of their employees and contractors would have caught. According to the 2015 case, “Plaintiffs alleged the defendants who are party to this appeal either hired Johnson or leased Johnson’s truck and, given Johnson’s license suspensions, tickets and otherwise allegedly checkered driving record, they were also negligent for hiring him or leasing him the truck.” The 2019 case went into even further detail about Johnson’s driving record, including the fact that he had lied about it in several different ways on his job application. It’s important to remember that just asking potential employees about their past is not sufficient, especially when it comes to licensing and safety related issues. Potential employers must verify what the applicant tells them. Amongst the lies the 2019 case lists:

  • Johnson listed two accidents on his application, but in fact had been in four accidents.
  • Johnson listed no moving violations on his application, but in fact had three moving violations.
  • Johnson listed one suspension on his application, but in fact had his license suspended twice.
  • Johnson claimed on his application that he had never been fired by another trucking company, but in fact had been fired by four trucking companies “for reasons that included tailgating a motorist, a felony conviction, too many points on his license, and crashing into a vehicle after refusing to let it merge onto an interstate ramp.” Denton v. Universal Am-Can, Ltd., 2019 IL App (1st) 181525, 146 N.E.3d 103, 438 Ill.Dec. 349 (Ill. App. 2019)
  • Most alarmingly, Johnson’s felony conviction stemmed from a road-rage incident in which he had attacked a car with a tire iron while four women were inside of it because he felt that they were driving too closely with their high beams on.

Although a safety checker with the company caught these lies in time to prevent hiring him, a different employee of the same company later overrode her decision, reasoning that the company needed to accept “marginal drivers” in order to turn a profit. It’s important to note here that the company probably would have suffered the same losses in court had it simply failed to do sufficient background checks. Universal Am-Can lost a $54 million verdict, which they eventually bargained down to $36 million in cash plus a previous $7 million payment, because they had such a bad driver working for them. It probably wouldn’t have mattered much whether they had failed to do a sufficient background check, or whether, as in this case, they did a sufficient background check and then disregarded it. Either is negligence.

Denton v. Universal Am-Can, Ltd.

Want to learn more about this case? This very expensive litigation had been dragging on for years, since a multi-vehicle crash that happened in early 2011. It played out in Illinois (which borders Indiana), where the Dentons are residents and where UACL conducts some of its business. Specifically, see:

for a look at how this litigation went on for almost a decade.

The writer is a lawyer and a coder, and a member of the Arizona bar.

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