Employer Providing a Defense (Criminal Collateral)

During a criminal investigation, an employee has certain rights that afford him or her legal representation.   Under California Labor Code 2802(a), an employer has an obligation to indemnify his or her employees for all the necessary expenditures or losses the employee has incurred that are a direct consequence of his or her employment duties.  If the employee acted within the scope of his employment and the employer believes that the employee did not commit a crime, the employer may afford its employee a defense.  An employee who acted under the obedience and direction of his employer, even though unlawful, the employee has a right to indemnification unless the employee at the time of obeying the directions of the employer, believed his conduct was unlawful.

For example, a Los Angeles pharmacist instructs his assistant to re-label the expired prescription labels  and subsequently a criminal and civil cases is filed against the employer and the employee. If the employee who acted in the obedience of his discharge of employment did not know at the time that his conduct was illegal, the employer may be required to indemnify the employees legal fees and expenses.

Another example is a bouncer who removes a patron from a nightclub because the patron was harassing the females at the club. Subsequently, criminal charges are filed against the bouncer for battery.  Arguably, the bouncer’s conduct was within the course and scope of employment and the employer may be obligated to provide the bouncer a defense pursuant to California Labor Code 2802.  

In California, employers generally will tender the claim to their insurance carrier or in-house counsel to make an independent investigation and determination as to provide representation for the employee. Instances of sexual harassment, negligence, allegations of abuse, intentional torts such as battery, assault, and false imprisonment, all gives rise to the issue of whether the employer is going to indemnify the employee for his conduct.  Independent legal counsel, or Cumis counsel, is necessary to avoid conflict of interest between the employees interests and the employers.  Retaining an experienced defense attorney to tender a defense to the employer and demand indemnification for independent legal counsel is necessary to vindicate the employee’s rights.

If you are under investigation for a criminal or civil allegation arising from your employment, call the Khachatourians Law Group to schedule an initial defense consultation.