· ShiftFlow Editorial Team · Glossary  · 5 min read

What Is Negligent Retention?

Negligent retention is keeping an employee a business knows poses risk. Learn elements, examples, defenses, and prevention policies to reduce liability.

Negligent retention is keeping an employee a business knows poses risk. Learn elements, examples, defenses, and prevention policies to reduce liability.

What Is Negligent Retention?

Negligent retention is a legal claim against employers who keep employees on staff despite knowing those employees pose danger to others or are unfit for their positions. When an employer fails to terminate or reassign a problematic employee who subsequently causes harm, the employer can be held liable for damages. This differs from negligent hiring (failing to discover risks before employment) in that retention involves ignoring known risks that emerge during employment.

Key takeaways

  • Investigate and document concerns promptly; escalate based on risk.
  • Apply corrective actions (coaching, reassignment, supervision) or terminate when risks persist.
  • Train managers to recognize warning signs and follow documentation standards.
  • Related: Employee code of conduct and disciplinary infractions.

Negligent retention claims have increased 35% over the past decade, with juries particularly unsympathetic to employers who ignored clear warning signs of violence, harassment, or incompetence.

To prove negligent retention, plaintiffs must show: (1) employer knew or should have known employee was unfit or dangerous, (2) employee posed risk through violence, harassment, substance abuse, or incompetence, (3) unfitness related to job duties and created foreseeable risks, and (4) unfitness directly caused injury.

Real-World Examples of Negligent Retention

  • Violent Employee: Warehouse worker assaulted coworker, received warning, then three months later severely injured another. Employer failed to remove known risk.
  • Driver with DUIs: Delivery driver had two DUI convictions while employed but continued driving; later caused fatal accident.
  • Healthcare Abuser: Nursing home employee had multiple abuse complaints but employer took no action; employee later harmed patient.
  • Harassing Supervisor: Multiple complaints of unwanted advances and touching; HR gave verbal warning only; supervisor later sexually assaulted subordinate.

Average settlements reach $1.2 million, with serious injury/death cases at $5–10 million. Legal defense alone costs $75,000–$150,000 even when employers win. Insurance often excludes intentional acts, leaving employers fully liable. Additional consequences include OSHA fines, state penalties, brand damage, recruiting difficulties, and media scrutiny.

Warning Signs That Require Action

  • Violence or Threats: Physical altercations, threats, intimidating behavior, weapons, obsessive conduct. Credible threats require immediate investigation and likely termination.
  • Substance Abuse: Intoxication, on-site drug use, DUIs, failed drug tests. Zero tolerance for safety-critical roles.
  • Sexual Harassment: Unwanted advances, inappropriate touching, quid pro quo harassment, retaliation. Multiple complaints demand action.
  • Theft or Dishonesty: Stealing, falsifying records, buddy punching, fraud.
  • Gross Incompetence: Repeated safety violations, ignoring protocols, causing preventable accidents.
  • Pattern of Disciplinary Infractions: Multiple warnings, escalating misconduct, ignoring corrective action.

How to Prevent Negligent Retention Claims

  • Document Everything: Maintain detailed records of issues, complaints, investigations, and actions with dates, witnesses, behaviors, and impact.
  • Investigate Promptly: Launch investigations immediately for serious misconduct. Assign trained investigators, interview parties, collect evidence, document findings.
  • Match Discipline to Severity: Use verbal warnings for minor offenses, written warnings for moderate issues, suspension/reassignment for serious violations, and termination for violence, harassment, or gross negligence. Don’t retain ongoing risks.
  • Terminate When Necessary: Remove employees who threaten violence, harass others, pose safety risks, violate laws or core employee code of conduct provisions, or show no improvement.
  • Conduct Regular Reviews: Document competence, safety compliance, and workplace behavior. Honest reviews strengthen your position.
  • Train Managers: Teach supervisors to recognize warning signs, document incidents, report immediately, and take protective measures.
  • Monitor High-Risk Roles: Periodically re-screen drivers, workers with vulnerable populations, and those with financial duties.
  • Separate During Investigations: Use reassignment, schedule changes, or paid leave to separate accused from complainant.
  • Consult Counsel: Balance negligent retention risk against wrongful termination risk; safety concerns generally justify termination when documented.
  • Negligent Hiring: Failing to discover risks before employment vs. Negligent Retention: failing to act on risks during employment.
  • Negligent Supervision: Failing to monitor or control known-risk employees.
  • Vicarious Liability: Automatic liability for actions within scope vs. negligent retention applying even to out-of-scope actions when employer knew of risks.
  • Wrongful Termination: Risk is far lower than negligent retention liability when employees pose genuine safety threats.

Industry-Specific Considerations

Two healthcare workers discussing shift handoff at nursing station whiteboard
  • Healthcare: Rigorous incident reporting, investigate all complaints, monitor licenses, terminate when patient safety is compromised.
  • Transportation: Annual motor vehicle checks, testing programs, zero tolerance for DUIs or safety violations.
  • Education/Childcare: Immediate investigation and likely termination for abuse or inappropriate conduct allegations.
  • Hospitality/Retail: Clear codes, visible supervision, zero tolerance for harassment, theft, or violence.

Documentation Best Practices

Retail supervisor documenting incident report on clipboard in stockroom
  • Performance Plans: Include expectations, goals, timelines, consequences. Don’t extend indefinitely for safety risks.
  • Incident Reports: Document date, time, location, individuals, witnesses, events, actions, follow-up.
  • Investigation Summaries: Include complaint, steps, findings, credibility assessments, conclusions, disciplinary action.
  • Witness Statements: Collect first-hand accounts.
  • Termination Records: Document violations, prior warnings, why lesser discipline was insufficient, decision-making process.

Conclusion

Negligent retention is costly and preventable. Once you know an employee poses danger, you must act through reassignment, supervision, or termination. Failing to act creates massive liability, regulatory penalties, and reputational harm.

Document thoroughly, investigate promptly, match discipline to risk, and terminate ongoing threats. Strong performance management, manager training, and detailed records protect your business, team members, and public from foreseeable harm.

Try ShiftFlow’s workforce management tools to document performance issues, track coaching, and enforce consistent policies across shifts with disciplinary infractions records.

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