Is a business owner liable for fraud committed by an employee who is a felon?

My gym requires all members to keep a valid credit card on
file. The manager of the gym stole my credit card info and
charged 800. I did a simple Google search on the manager
and easily found an extensive criminal record. If the owner
had done even a cursory background check on this
employee he would have found this information. So is the
owner liable in any way for the theft?

Asked on April 19, 2017 under Business Law, Indiana

Answers:

S.L,. Member, California Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

The employer is not liable for the fraud / theft of your credit card information because those are intentional acts.  The employer is liable for the negligence of an employee which occurs during the course and scope of employment. 
The employer is liable for negligence for hiring this particular employee who had an extensive criminal record.
Negligence is the failure to exercise due care (that degree of care that a reasonable employer would have exercised under the same or similar circumstances to prevent foreseeable harm).


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