APPLYING AGENCY THEORY IN EMPLOYMENT DISCRIMINATION CASES | Law.com
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The Supreme Court's Kolstad ruling forces a reckoning with agency theory — when does a rogue manager's discriminatory act legally become the employer's sin?
Principal-Agent ProblemAgency TheoryVicarious LiabilityRespondeat Superior
Theory Briefing
- The Supreme Court's Kolstad v. American decision made agency theory the decisive framework for employer liability in discrimination cases.
- Agency theory asks whether a discriminatory manager acted within the scope of authority granted by the employer, shifting who bears legal responsibility.
- If employers can prove they actively discouraged discrimination, agency theory may shield them from punitive damages — rewarding good-faith compliance programs.