What is Negligent Retention?: When Keeping an Employee Becomes a Liability

What is Negligent Retention?: When Keeping an Employee Becomes a Liability

By:

Regina Dyerly, sHRBP, PHR

Partner / Chief Operating Officer | Vida HR

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We've all seen it: the employee everyone knows is a problem, but no one wants to deal with.

Maybe they're a top performer who consistently bends the rules because they "get results," a long-tenured employee who ignores safety procedures because "that's how they've always done it," or maybe they've generated multiple complaints over the years, but each incident has been viewed in isolation instead of as part of a larger pattern.

The conversations become familiar:

• "They're difficult, but they're our best salesperson."

• "That's just their personality."

• "We've coached them before."

• "Let's give them one more chance."

Sometimes those decisions are perfectly reasonable, but sometimes they're not. That's where a concept called negligent retention enters the conversation.

Defining Negligent Retention

Most employers have heard the term negligent hiring, the idea that an employer failed to exercise reasonable care before bringing someone into the organization.

Negligent retention shifts the focus to what happens after someone is hired. It is the legal theory that an employer may be held liable if it knew, or reasonably should have known, that an employee posed a foreseeable risk to others and failed to take appropriate action.

What Negligent Retention DOES NOT mean:

Negligent retention doesn't mean employers should terminate every employee who receives a complaint or makes a mistake. Employees deserve fair investigations, coaching when appropriate, and the opportunity to improve. The expectation isn't perfection, it's that employers respond thoughtfully and reasonably when concerns arise.

When Does Inaction Become ‘Negligent Retention’?

Negligent retention claims often arise when an employer is aware of serious or repeated concerns but allows the behavior to continue without taking meaningful action.

Examples may include:

• Multiple harassment or discrimination complaints that are ignored or inadequately investigated.

• Threats of violence or escalating workplace misconduct.

• Repeated safety violations in roles where employees, customers, or the public could be harmed.

• Theft, fraud, or other dishonest conduct that goes unaddressed.

• An employee working while impaired in a safety-sensitive position.

The common thread is foreseeability.

Once an employer becomes aware of information suggesting an employee may pose a risk, there is an expectation that reasonable steps will be taken to address the situation.

What Does "Reasonable Action" Look Like?

There isn't a one-size-fits-all answer, and that's important. Sometimes the appropriate response is additional coaching, training, or closer supervision. In other situations, a written warning, reassignment, a leave of absence, or termination may be the safest and most appropriate course of action.

The goal isn't to eliminate every risk or rush to terminate employment. It's to make thoughtful, well-reasoned decisions based on the facts available at the time rather than hoping the issue resolves itself.

Practical Steps to Reduce Risk

Strong employment decisions are built on consistent processes, not perfect hindsight.

Here are a few best practices:

Take employee concerns seriously, even when they seem informal.

Investigate complaints promptly, objectively, and consistently.

Document findings, decisions, and any corrective action taken.

Apply policies consistently, regardless of an employee's title or performance level.

Follow up after corrective action to ensure expectations are being met.

Consult HR or employment counsel when dealing with significant misconduct, harassment, safety concerns, or potential workplace violence.

The Bottom Line

One of the biggest shifts we're seeing in HR is moving from reacting to problems to helping leaders recognize risk earlier. Negligent retention isn't really about legal liability, it's about leadership and having the courage to address difficult issues before they become bigger ones.

Sometimes the right answer is additional coaching, increased oversight, or it's recognizing that a high performer is creating costs that outweigh their contributions. And sometimes it's recognizing that an employee is no longer the right fit for the organization.

The goal isn't to eliminate every risk; it's to make thoughtful, well-documented decisions that protect your people, culture, and business.  The best employment decisions aren't driven by fear of litigation, they're driven by good leadership.

When organizations address concerns early, support managers through difficult conversations, and make thoughtful, well-documented decisions, they're not only reducing risk, they're building stronger teams and healthier workplace cultures.

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What is Negligent Retention? : When Keeping an Employee Becomes a Liability