Where a company employee commits a federal crime while acting in the course and scope of his/her job duties and acts with the intent to benefit the company, the company will likely be criminally liable for the employee’s actions along with that employee. This is called vicarious liability, where one person’s or party’s criminal act confers liability upon a second, related person or party.
The standard for vicarious criminal liability in the federal criminal system is quite low. Basically, where any employee commits a criminal act while working pursuant to his/her job duties and the criminal act was done to benefit the company, the company will also be criminally responsible no matter where the employee fits on the company hierarchy and no matter what efforts the company undertook to prevent the criminal act. In other words, the employee who commits the criminal act can be the lowest level employee and the company can have a variety of strict and thorough policies and procedures in place to deter the criminal conduct, and the company can still face severe financial penalties for the employee’s criminal act.
In the Second Circuit (New York), federal criminal attorneys are arguing to change this low standard which basically amounts to automatic criminal liability for a company if the the factors mentioned above are met. Pursuant to the case United States v. Ionia Management where a large commercial oil tanker company’s employees dumped waste into the sea while shipping oil for the company in violation of federal criminal law, criminal defense attorneys are arguing that the standard for vicariously attributing criminal liability to a company for the conduct of its employee(s) should be raised to apply only where the employee(s) is a higher level, managerial employee and should take into account whether and to what extent the company had policies and procedures in place to try and prevent such criminal acts from occurring. This would not only allow for a more reasonable and considered application of corporate liability for the actions of employees but also encourage corporations to proactively deter employees from committing criminal acts.