Beyond the relationship: what is vicarious liability under the law

Vicarious liability means the blame does not stop with the person who caused the harm. Under Canadian law, it can travel up the chain to the employer, the institution, or increasingly, the platform.

In this article, we’ll discuss what personal lawyers in Canada need to know about where the doctrine stands today, and where it is heading. This article can also be used by lawyers as an educational piece for their clients.

What is vicarious liability in Canadian tort law?

Vicarious liability is a form of strict liability. By this, a party can be held legally responsible for another person’s wrongful act without any proof that they personally did something wrong. The vicarious liability then arises from the relationship between the parties, not from any finding of fault.

Vicarious liability in employer-employee relationship

The most common example is the employer-employee relationship. Under Canadian common law, an employer can be held liable for a wrongful act committed by an employee, provided the act occurred in the course and scope of their employment. If the employee acted purely for personal reasons, with no connection to their job, the employer generally will not be liable.

The core framework of this type of liability was laid out in Bazley v. Curry, [1999] 2 SCR 534. The court wrote that vicarious liability is “generally appropriate where there is a significant connection between the creation or enhancement of a risk and the wrong that accrues therefrom.”

Here, the employer does not have to be negligent, and the employer does not have to know about the wrong. What matters is whether the enterprise the employer created materially increased the risk of the harm.

This video shows secondary liability and vicarious liability differs, as applied in the context of corporate officers and directors:

Check out our article on “Personal injuries proceedings act: Limits, notices, and traps” to learn about the factors that lawyers and litigants should not miss in these cases.

Two reasons vicarious liability works this way

The Supreme Court in Bazley identified two policy reasons that underpin the doctrine:

• Fair compensation: The employer puts an enterprise into the community and, with it, certain risks. When those risks produce harm, it is fairer to place the loss on the risk-creator than on the innocent victim. Employers are also better positioned to absorb losses through insurance or other mechanisms.
• Deterrence: Fixing employers with liability encourage them to reduce the risk of employee wrongdoing through training, supervision, and better organisational design. Negligence law alone, the court noted, often cannot reach the full range of preventable harm.

These two rationales are also what define the doctrine’s limits. Where a wrong is only incidentally connected to employment, neither policy is served and liability will not follow.

When does liability extend beyond the employer?

The harder cases arise when an employee commits an intentional wrong, including sexual abuse, that the employer never authorised and would never condone. Two companion decisions from the Supreme Court, released the same day in 1999, set the boundaries.

Bazley: organization is vicariously liable

In Bazley, the Children’s Foundation, a non-profit organisation, operated residential care facilities for emotionally troubled children aged six to twelve. Its employees were authorised to act as substitute parents, including bathing children and tucking them in at bedtime.

The Foundation hired Leslie Curry, who turned out to be a pedophile, though no background check revealed this. Curry sexually abused several children in his care, including Patrick Bazley.

The Supreme Court held that the Foundation is vicariously liable. The terms of employment had created near-total intimacy and authority over vulnerable children; the enterprise had materially enhanced the very risk that produced the abuse.

Jacobi: vicariously liable is inapplicable

The companion case, Jacobi v. Griffiths, [1999] 2 SCR 570, reached the opposite result on similar facts. Harry Griffiths was the program director of a recreational Boys’ and Girls’ Club in Vernon, BC. He cultivated friendships with children at the Club, then invited them to his home after hours and assaulted them there.

The Supreme Court, by a 4–3 majority, declined to impose vicarious liability, because of the following reasons:

• the Club ran group recreational activities, not a residential or parenting program
• the children went home to their parents every night
• the assaults occurred off-site, after hours, and were driven by Griffiths’ personal agenda

The majority found the connection between the Club’s enterprise and the abuse was not strong enough to justify no-fault liability.

Here’s a video which explains how vicarious liability helps in a sexual abuse claim under Canadian laws:

Check out Canadian Lawyer’s Special Report on Canada’s Best Personal Injury Law Firms for a list of the country’s leading personal injury boutiques and firms.

What courts look at in institutional abuse cases

From Bazley, courts assessing vicarious liability in institutional settings consider the following factors:

• the opportunity the enterprise gave the employee to abuse power
• whether the wrongful act was related to intimacy or authority inherent in the employer’s operations
• the degree of power the employer conferred on the employee over the victim
• the vulnerability of potential victims
• whether the wrong furthered, or was at least closely tied to, the employer’s aims

It is also confirmed in Bazley that non-profit organisations are not exempt from vicarious liability. The court rejected the argument that charities should be treated differently, noting that from the victim’s perspective, it was the Foundation’s enterprise that enhanced the risk, and it was fairer to place the loss there than on an innocent child.

Does vicarious liability apply to contractors?

The general rule is that employers are not vicariously liable for the acts of independent contractors. The Supreme Court settled the applicable test in 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., 2001 SCC 59.

The case arose from a bribery scheme. American Independent Marketing Inc. (AIM), a consulting firm retained by Sagaz Industries to market seat covers to Canadian Tire, had bribed a Canadian Tire buyer to secure the contract. Design Dynamics, which lost the contract as a result, sued Sagaz on the basis that it should be vicariously liable for AIM’s conduct. However, the Supreme Court disagreed.

The factors courts weigh: employee vs. independent contractor

The court held in Sagaz that there is no single conclusive test for distinguishing an employee from an independent contractor. The central question is: is the person performing services as someone in business on their own account?

In answering that question, courts look at the total relationship between the parties, including:

• the level of control the engaging party has over how the work is done
• whether the worker provides their own equipment
• whether the worker hires their own helpers
• the degree of financial risk the worker carries
• the worker’s opportunity for profit or exposure to loss

“Although Sagaz controlled what was done, AIM controlled how it was done,” the court said. That distinction, i.e., control over what versus control over how, has become a practical reference point in subsequent cases. Because AIM had its own offices, bore its own costs, and retained discretion over how it conducted its work, it was an independent contractor, and Sagaz was not liable.

One important caveat: the label “independent contractor” in a written contract is not conclusive. Courts look at the true nature of the working relationship, not just how the parties chose to describe it.

Are gig economy platforms on the hook for harm for vicarious liability?

This is the question Canadian courts have not yet fully answered, and the one that personal injury lawyers should be watching closely.

Platforms like Uber, DoorDash, and similar services classify their workers as independent contractors. Under the Sagaz test, that classification would normally shield platforms from vicarious liability when a driver or delivery worker injures a third party. But the economic reality of gig work does not fit neatly into the traditional independent contractor model:

• platforms set rates unilaterally
• algorithmic systems monitor performance and can deactivate workers for low ratings
• workers typically have no ability to negotiate their terms of engagement
• the platform controls route optimization, acceptance requirements, and timeframes

Two Canadian provinces have moved to address the gap through legislation, although neither fully resolves the tort liability question:

• British Columbia: amendments to the Employment Standards Act and Workers Compensation Act that came into force on September 3, 2024, designate online platform operators as employers of gig workers for the purposes of minimum standards and WorkSafeBC coverage
• Ontario: the Digital Platform Workers’ Rights Act, 2022 came into effect on July 1, 2025, which extends protections to ride-share and delivery workers regardless of their employment classification, but stops short of reclassifying them as employees under the Employment Standards Act

Neither statute directly resolves the common law vicarious liability question in personal injury claims. Whether a platform could be held liable when one of its drivers causes a collision, or a delivery worker assaults a customer, remains an open and largely untested question in Canadian appellate courts.

Vicarious liability: liability does not always stop at the door

Vicarious liability is, at its core, about where responsibility should fairly sit when something goes wrong inside an enterprise. As Canadian courts have moved well beyond the simple employer-employee scenario, they now examine the nature of power, the intimacy the work requires, the vulnerability of those affected, and the degree to which the enterprise itself created the conditions for harm.

The same questions that courts asked about residential care facilities in 1999 are now being asked about platforms that dispatch workers into private homes, vehicles, and communities at scale. The doctrine has always followed the risk, which nowadays is distributed across more relationships than ever before.

Bookmark Canadian Lawyer’s Personal Injury page for more articles on doctrines for Canadian legal professionals, such as vicarious liability.