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Employee E works as part of a development team for company C, which has a contract with customer F. Suppose that F is dissatisfied with the work product that C submits. Under what circumstances would F succeed in suing E (as opposed to C) for the allegedly defective work?

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To sue the employee the customer would have to show that the employee was personally involved in negligently causing the work to be defective, on a negligence theory, and the information necessary to establish this claim would be hard to obtain.

In contrast, the company, C, would have strict liability for both breach of warranty (which is a contract theory) and under a tort based (i.e. non-contractually based) product liability theory. The employee would not have liability under either of these theories.

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  • Would simple negligence be sufficient to pierce corporate veil and sue the employee? Wouldn't it need to rise to gross negligence?
    – Pyrotechnical
    Commented Mar 6 at 1:43
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    @Pyrotechnical It isn't piercing the corporate veil (which only allows you to sue owners and officers and directors of the corporation, not mere employees). You can always sue someone in tort for a tort that they personally participated in. In a simpler case, if you are driving a car on company business and get in an accident that is your fault, both the driver-employee and the company both have joint and several liability for the accident. Here, personal participation in causing the defect is equivalent to driving the car. Veil piercing isn't related to level of negligence either.
    – ohwilleke
    Commented Mar 6 at 2:55
  • @Pyrotechnical Veil piercing typically has as its central element co-mingling of business and personal property and funds in a way that harms a creditor. It overlaps heavily with liability for a fraudulent transfer as assets to harm a creditor.
    – ohwilleke
    Commented Mar 6 at 2:57
  • I'm not sure the example of driving the car works with regards to this question. The driver and the person they hit didn't have a contract with each other nor with the company. Additionally, isn't there a level of responsibility one has by accepting a driver's license to drive with care and failing to do so opens you up to liability?
    – Pyrotechnical
    Commented Mar 7 at 15:49
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    In practice, F is much better advised to sue C, which will have liability insurance and be able to pay damages, and have a contract with F, rather than take the much less certain lawsuit against E. But if the employees' actions were damaging enough and C was already bankrupt/ceased business, then a suit against E may be the only way to recoup some money.
    – Stuart F
    Commented Apr 8 at 9:57
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Probably only in the event of malpractice by a licensed professional

In general, the situation of Customer F suing Employee E when their contract is with Company C is pretty much not feasible. Customer F has no contract with Employee E, their contract is with Company C, which is a legal entity that they are transacting with when creating the initial contract.

If Customer F is dissatisfied with the work product provided by Company C, then they need to complain and take action against Company C. Company C can then proceed to try to remedy the situation in any fashion they deem acceptable including having Employee E fix the work; having Employee E2 fix the work; hire Subcontractor S to fix the work; or numerous other options.

Assuming Company C does not fix the issue, Customer F could sue pursuant to the terms of the original contract they have.

The second issue that impedes the scenario you described is a legal concept called 'corporate veil'. Attempting to take action against the employees of a company is generally not legally permissible unless the the corporate veil is pierced, which is generally only allowed when a company is proven to have been created for the purpose of shielding bad actors from consequences.

All of that said, there are cases where directly suing an employee could occur and that is in the situation of work being performed by licensed professionals. In my personal experience as a professional engineer, were I to put forth a design that failed to meet the standards of care for my profession, I could be personally sued (and so could my company).

This becomes relevant when we see the fallout from civil engineering disasters like the recent Florida Pedestrian Bridge Collapse wherein the Engineer of Record (EoR) failed to properly address multiple issues during the design and construction process resulting in the collapse.

FIGG Bridge Engineers was the company responsible for the design and Denney Pate was the EoR. Both FIGG and Pate were penalized by USDOT which barred them from participating in federal contracts for 10 years.

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  • Not far from the mark, but professional licensure probably isn't relevant.
    – ohwilleke
    Commented Mar 5 at 23:54
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    Piercing the corporate veil refers to suing owners of a corporation, not employees.
    – phoog
    Commented Mar 7 at 9:41
  • @phoog the original question isn't clear as to exactly who Employee E is with regards to a corporate structure. If they're not an owner then I'd defer to the first part of my answer whereby no contract exists between the employee and the customer. If they are an owner then corporate veil does apply.
    – Pyrotechnical
    Commented Mar 7 at 15:58

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