Vicarious Liability and Matching

[Rip Verkerke <ripv@virginia.edu>]

A student asked:

While doing a little exam review, I became confused by your
recap from April 12 (Day 34), and your analysis of the
"matching" phenomenon.  Are you arguing that the imposition
of vicarious liability on high-risk employers would
encourage high-risk employees to find lower-risk jobs? Or,
are you saying that the imposition of liability will force
high-risk employers to take more internal precautions with
their employees? Or, perhaps you meant that the imposition
of liability in cases like Mary M somehow reflects/
motivates the concept of matching? As you can tell, I'm
more than a little confused by this concept.  Any help you
can give would be much appreciated.

Rip responded:

The short answer is yes, yes, and yes.  In fact, liability imposed on
high-risk employers could have all three effects.  Employers might take more
precautions in screening and monitoring.  As a result, undesirable employees
might react by looking for work elsewhere.  And the expansion of liability
in cases like Mary M surely reflects judicial concern about keeping
employees with dangerous propensities out of high-risk jobs.

Despite these beneficial effects, my analysis also suggests some reason to
be cautious about expanding liability.  If high-risk employers really can't
screen out undesirable applicants, we might end up with the worst of both
worlds - churning employees among high-risk jobs.  For this reason, we might
sometimes be better off using negligence liability to adjust employer
incentives.  Properly understood, negligence could even take account of the
questionable value of the precaution of discharge.  So I would evaluate any
expansion (or contraction) of liability according to whether it seemed
likely to promote better matching or instead to cause employee churning.

Warm regards,

Rip