Supreme Court rules local governments liable for abuse in outsourced care centers

The Supreme Court ruled on May 29 that local governments can be held legally responsible for sexual misconduct committed by staff at outsourced community care centers.

The decision establishes that a supervisory relationship exists between the municipality and employees of private nonprofits operating these facilities, creating an employer-employee relationship under Article 756 of the Civil Act even without a direct hiring contract.

The ruling stems from a case where a childcare teacher employed by a nonprofit organization sexually assaulted a child during class at a center operated under a municipal delegation agreement. The victim and their parents sought damages from the local government.

The court noted that local governments are the primary entities responsible for establishing and operating these care centers under the Child Welfare Act. Delegation agreements typically grant the municipality broad powers to manage performance, review budgets, demand document inspections and order corrective measures.

Municipalities often dictate specific operational details such as hours, fees, staffing levels and salary structures before selecting a partner. Since local governments also directly operate some centers while delegating others, they maintain an objective position requiring substantial supervision over all facilities within their jurisdiction.

The court concluded that the local government in question had an objective duty to substantially supervise the business execution of both the nonprofit organization and its employed teachers.