It may be no surprise a company can be held not just civilly, but also
criminally liable, for the unlawful acts of its employees under the doctrine of
respondeat superior, or “let the master answer.”
Indeed, vicarious criminal liability makes sense if we are talking about
an officer of a company, or maybe even a manager; after all, a company
can only act through its agents. Without vicarious liability, a company
would benefit from hiring of unscrupulous agents who conspire to violate
the law. Unfortunately, criminal liability goes much deeper than the key
members of the organization, to the lowest echelon employees.
The United States Supreme Court has long held that Congress has the ability
to punish a company for the criminal behavior of all employees. The prosecutor
need only prove that the employee responsible for criminal conduct acted
within the scope of his employment.
This legal standard
does not require the company authorize or direct the employee to conduct the criminal
act. A corporate defendant can be held criminally liable for the conduct
of a low-level employee, even one who acted in violation of company policy.
For example, in a recent federal case, low-level employees were illegally
dumping waste and then cooking the books to cover up the criminal act.
The ownership and officers of the corporation had no idea employees were
engaged in this illegal conduct. Further, the company had a policy to
prevent the illegal dumping of waste as well as a strong compliance program
to enforce the policy. Regardless, the Court reaffirmed the company was
guilty of a crime based on the acts of insubordinate, lower echelon employees.
Fortunately, when a corporation is facing a federal indictment for the
criminal acts of employees, the government does not necessarily dismantle
the company. Often, the matter is settled with fines and sometimes government
monitoring for a period of time. Of course, if a high-level officer is
involved in the crime, things get a little more complicated, especially
for the officer who will likely face individual criminal charges in addition
to any crimes charged against the corporation.
In contrast, government officials may not be held liable for the unconstitutional
or unlawful conduct of their subordinates under a theory of
respondeat superior. Just another example of the double standard between those who make laws
and those who live under them.