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Things You Need to Know About Corporate Criminal Liability for the Acts of Employees

Corporations are known to be held 100% liable for what their employees do. In short, when an employee does a…

Things You Need to Know About Corporate Criminal Liability for the Acts of Employees

17th February 2021

corp liability

As a company owner or corporate CEO, you know very well that an employee is not only your closest friend but also your greatest enemy – or, better said, a danger. Why?

This fact is true mainly because corporations are known to be held 100% liable for what their employees do. In short, when an employee does a bad thing, corporations will need criminal defense instead of prosecution!

However, the laws that govern who can be held liable are not that loose. As such, here’s what you should know about the corporate criminal liability for the acts of employees!


The Stance of Federal Law

Federal law states the following regarding the actions of an employee concerning a corporation and liability:

  • Corporate liability comes into play only if the employee engages in behavior/actions that they are allowed to perform.
  • Moreover, the same applies when the employee acts on behalf of the corporation or their actions benefit the corporation, even in part. 
  • Even though the employee’s actions were against the corporation’s policies, this cannot be used as a defense.
  • Even though the manager board reportedly tried to stop the crime from happening, this reason cannot be used as a defense.

All the above is possible because the Attorney’s Manual of the US, specifically Title 9, encourages law offices and institutions to go after corporations instead of individual employees. 


Why are Corporations Favored?

Corporations should be targeted in case of employee criminal misconduct because of the variety of public benefits from such an act.

For example, a corporation being charged for espionage will make other corporations think twice before engaging in a similar practice. 

Moreover, it is worth noting that during the prosecution stage, those in charge of it are taking into account things as corporation cooperation, remedial actions, as well as compliance programs.

All of these play a role in the final conviction


Corporate Criminal Liability Across the US

Most legislatures follow the federal laws and rules in place. However, the likes of Ohio, Kentucky, and some more, have their laws regarding corporate criminal liability. 

  • For example, the government must first show that criminal misconduct was approved by one of the corporation’s managers.
  • On the other hand, in Indiana, an employee may act without authorization and still get their corporation liable. How? If their activity is related to an authorized one that is part of their employment responsibilities, then the blame shifts onto the corporation, so to speak.

It is worth mentioning that if a corporation is being held liable for a criminal act, the employee responsible for the act is not free to walk. According to federal law, both corporations and responsible employees can be charged at the same time. 


The Bottom Line

In the end, businesses and corporations must know everything about what an employee does, can do, and shouldn’t do. 

If they keep tabs on an employee’s activity – strictly within the workplace – they can easily avoid being charged and held liable for a crime they may have no connection with!

Categories: Advice, Articles

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