Advising a large company on its civil and criminal exposure and external response after alleged misconduct by a sales employee

This matter involved allegations that a sales employee of a large company had demanded money and entertainment from a business partner in exchange for offering it favorable supply terms. The business partner claimed it had suffered losses because of the employee's misconduct, sought to hold the company responsible, and threatened to file a criminal complaint and go to the media.

Attorney Jaehoon Lee reviewed, on behalf of the company, its legal liability for the employee's misconduct and its options for responding externally.

The key issues were whether the employee's personal misconduct would be treated under the Civil Act as conduct related to the performance of the employer's business, making the company liable for damages, and whether the business partner had known that the conduct was improper.

Also at issue were whether the company could bear criminal liability in connection with the extortion allegations against the employee, and what legal measures the company could take if the business partner disclosed the allegations to the media or others.

Attorney Lee reviewed the requirements for employer liability and the relevant case law, and analyzed how the company's liability for damages could vary depending on the connection between the sales employee's duties and the conduct at issue and on the business partner's knowledge and any fault on its part.

He also reviewed whether the company as a legal entity could bear criminal liability for an employee's personal criminal conduct, and analyzed whether disclosure to the media by the business partner could constitute criminal defamation and whether any grounds for excluding unlawfulness would apply. In particular, he proposed response options that weighed not only the effectiveness of legal action such as a criminal complaint but also the reputational risk to the company.

We reviewed whether the company could face civil or criminal liability for an employee's misconduct, and provided a legal opinion setting out response options and related risks in light of a business partner's threats of public disclosure and a criminal complaint.