Employees are also liable for Torts

We don’t want to get too law-schoolish, so we will describe a tort simply: it is a civil claim that is not based on a contract or a statute.

Contractual claims are generally between the parties to a contract. In the case of a car dealership, a contractual claim would be between a customer and the dealership. There are many claims based on statutes that can be brought against a dealership whether it is by a customer for an alleged violation of the Truth in Lending Act or the Fair Credit Reporting Act or by an employee for an alleged violation of the Fair Labor Standards Act. Torts claims, however, are different.   Under tort law, in a dealership context, not only can the employing dealership be liable for an employee’s wrongful activity, but the employee can also be liable. 

The best example is a car crash. Not only can the owner of the vehicle be sued for the acts of the permissible driver, but the driver can also be sued.

This brings us to improper sales activities. Salespeople generally don’t view overly aggressive tactics as problems for themselves. However, a claim of fraud is a common claim made by a plaintiff who feels wronged. And fraud is a tort. A fraud claim can be brought against a dealership and a salesperson.

Consequently, the next time you are talking to employees about your compliance requirements, you might want to let them know that you are not just worried about liability for the dealership. You are also talking about preventing liability for the salespeople themselves.