Owner Liabilities: When Employees Drive

On the heels of stringent new regulations restricting the use of hand-held cellular phones while driving, it is more important than ever that employers be aware of their potential liability for employees’ actions behind the wheel. 

Under the new federal regulations, commercial motor vehicle drivers are prohibited from using hand-held cell phones while driving. Infractions may result in penalties of up to $2,750 for individual drivers, with the potential to lose their CMV license, and fines of up to $11,000 for employers who “require or allow” their drivers to use hand-held cell phones while driving. 

CMV drivers are not the only ones who need to be careful, though: An employee driving a company car, or driving their personal car for business use, can make you liable as well. Here are some basic rules to remember if you have employees who drive any vehicle for work:

Vicarious Liability
•    Business owners will generally be held liable for injuries to third parties caused by their workers within the scope of their employment. This applies whether the employee is driving a company-owned or a personal vehicle. 
•    What is considered to be “within the scope of employment” will differ for each employee, but generally if it’s something a manager authorizes the employee to do, or it is necessary for the employee to carry out his or her job function, it fits. 
•    The business owner does not even need to be aware of what the employee is doing when they are involved in an incident, as long as the activity is related to the employment. An exception to this rule is when an employee commits an intentional bad act, or when they deviate so far from work-related activities that they are no longer considered acting on behalf of the company. 

Negligent Entrustment
•    Business owners may also be held liable if they allow an employee whom they know to be unlicensed, incompetent or unqualified to drive a company car. 
•    “Knowledge of incompetence” may be knowledge that the employee had
been drinking alcohol and/or has a history of getting drunk, or has a history of reckless driving. 
•    A business owner will be liable if they knew or had reason to know that an
employee was incompetent to drive, whether due to mental or physical
incapacitation, intoxication or medication.

Distracted driving is a growing problem in this country, and the best way to avoid liability for your employees’ actions is to be sure they are aware of relevant laws and practice safe driving habits. You should encourage employees to always pull over before using a cell phone in a car—even if it is not prohibited by your local or state government. 

If you are aware that an employee has a poor driving record, or tends to drive recklessly, it may be wise to limit or altogether end any work-related driving by that employee. Finally, be sure to update your company’s policy and any employee handbooks to reflect the most recent regulations in your area regarding distracted driving. 

For further tips, visit the U.S. Department of Transportation’s distracted driving website at www.distraction.gov.
 
Karen R. Harned is the executive director of the NFIB Small Business Legal Center, www.NFIB.com/legal. This article is intended to provide general information for reference only and should not be considered legal counsel.

Have a legal question for Karen? Send it to NFIB@imaginepub.com, with “Ask Karen” in the subject line, and she may answer it at www.NFIB.com/business_tips.