Employers are not always responsible for the actions of their employees, and it depends on whether the employee's misconduct occurred within the scope of his or her employment. Going along with the rational discussed in part 1, an employer should be responsible for the risks they expose the public to when they make decisions that will benefit their business, and should therefore be responsible for the actions of their employees when in fact the employee is acting within the scope—or on behalf—of that business. However, an employer should not be responsible for the actions of their employees outside of the employment, because allowing for this would create unlimited liability for employers and discourage anyone from running a business.

For example, let's say that during the weekend, while an employee working for a grocery store is off work, the employee goes to a bar and smashes a beer bottle over another person's head. It would be unreasonable to hold the grocery store responsible for the misconduct of their employee, because the misconduct occurred at a time and place completely unrelated to the store's line of work. In other words, at the time the misconduct occurred, the employee was not acting within the scope of his employment or on behalf of the grocery store.

On the other hand, let's say the grocery store asks the employee to go to a bar and handout advertisements to the bar patrons and the employee ends up smashing a beer bottle over another person's head. In this case, the grocery store would be responsible—and may even have to pay punitive damages—for the misconduct of their employee because the employee was acting within the scope of his employment working on behalf and for the benefit of the grocery store.

However, the line of whether an employee was acting within or outside the scope of employment is not always that easy to distinguish. For example, what if an employee negligently gets into an accident going to or coming from their work? What if—while an employee is running an errand for an employer—the employee takes a personal detour from their main assignment and, during the detour, acts wrongfully then? In these kinds of situations it can get kind of tricky, but legal rules have been established to try and sort it out.
Typically, employers won't be responsible for misconduct that occurs when their employees are coming to or leaving from work; this is known as the “going and coming rule.” The only exception to this is if, while going and coming from work, the employee is providing a special or unique benefit for the employer during the commute. For example, some employers reimburse employees for the cost of gas in order to encourage employees with long commutes to work for the employer. Since the employer is paying for transportation and receiving a benefit they maybe liable for the misconduct that occurs during those commutes. Likewise, a lot of employers ask their employees to bring or take home company equipment; in this situation, the employer will also likely be liable for any misconduct that occurs during the commute since the employee is providing the employer with a special benefit. Similarly, an employee's personal detour—legally termed a “frolicking detour”—is usually outside the scope of the employee's employment unless, again, the detour itself is providing a unique or special benefit to the employer.