In a significant broadening of vicarious liability for employers, the American Law Institute (ALI) recently approved a “Special Rule on Vicarious Liability for Sexual Assault” as part of the Third Restatement of Torts: Miscellaneous Provisions. This marks a notable deviation from the traditional imposition of vicarious liability on employers by imposing liability “even when the employee was not acting with a motive to serve the employer’s interest.” However, ALI has drafted this special rule with “significant guardrails” meant to temper the burden placed on employers.

• Recent case law has indicated a gradual shift toward holding employers liable for employees’ sexual misconduct.
• To expand this liability for employers while acknowledging the risk of creating too much liability, the rule only applies to sexual assault that meets specific criteria, including only applying in circumstances where the victim is “particularly vulnerable.”
• This rule only applies to employer-employee relationships and does not create any liability for actions of independent contractors.
• Although restatements are not law, they do provide persuasive authority for the courts.
• Higher-risk industries include healthcare, hospitality, education, religious institutions, and law enforcement.

Reflecting a gradual trend toward increased employer liability for the sexual misconduct of employees, ALI recently issued guidance suggesting expanded vicarious liability for employers in certain specific...

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