Are Your Company Drivers Creating Liability Risks?

Driving is a routine part of many job responsibilities, from sales representatives visiting prospects to delivery drivers transporting goods, and even office managers going to the bakery to get a cake for employee birthday celebrations. Employees with driving responsibilities create significant responsibility for companies to ensure that their employees drive safely and legally when conducting company business. This article will outline the key aspects of liability when employees drive on company business, including the company's responsibility for checking driving records, insurance company responsibilities, negligent entrustment, and best practices for limiting liability.

Company Responsibility for Checking Driving Records

One of the fundamental responsibilities of companies when their employees drive for business purposes is to ensure that they have valid driver's licenses, registrations, insurance, and clean driving records.

Conducting thorough driving record checks is essential when driving is part of the job. Regularly checking driving records helps companies identify any violations or issues affecting driving eligibility, ensuring that only qualified and safe drivers are on the road representing the company. This process typically includes reviewing past traffic violations, accidents, and the validity of the driver's license. By implementing strict protocols for checking driving records, companies can mitigate the risk of accidents, legal liabilities, and reputational damage associated with employing drivers with poor driving histories and behaviors.

Insurance Company Responsibilities

Insurance plays a crucial role in managing the risks associated with employees driving on behalf of the company. Companies typically need adequate insurance coverage, such as commercial auto insurance and liability coverage, to protect against financial losses in case of company vehicle accidents or injuries. Additionally, a company with employees driving personal vehicles on company business will want to be covered under a commercial auto insurance umbrella policy.

For instance, if an employee driving a personal vehicle causes a car crash that results in multiple injuries and the medical expenses exceed the employee’s personal car insurance liability limits, the business is responsible for paying the additional amount not covered. If the company has commercial umbrella insurance, the policy will cover the excess amount.

Insurance companies are responsible for assessing risks accurately, providing appropriate coverage, and handling claims efficiently. An insurance company may list an employee of the company as an additional insured on the commercial auto or umbrella policy. Still, it is the employer's responsibility to conduct due diligence to ensure that employees meet the criteria set by the company for classification as safe drivers. Companies must work closely with their insurance providers to understand their coverage options, policy requirements, and risk management strategies related to employee driving activities.

Negligent Entrustment

Negligent entrustment is a legal concept that holds companies liable for entrusting vehicles to employees who are unfit or unqualified to drive safely. This concept emphasizes the importance of companies assessing employees' driving records and ensuring their driving records meet the set criteria before allowing them to operate company vehicles. Failure to exercise reasonable care in entrusting vehicles can result in legal consequences and significant company liabilities.

For example, suppose a company knowingly allows an employee with a history of reckless driving to operate a company vehicle, and an accident occurs due to that employee's negligence. In that case, the company may be held liable for negligent entrustment. To avoid such situations, companies should implement robust driver screening processes, detailed safe driving policies, provide comprehensive driver training programs, and regularly monitor and evaluate employees' driving records and on-the-job driving performance.

Best Practices for Mitigating Liability

To mitigate liability risks from company drivers and promote safe driving practices among employees, companies should implement these best practices:

• Create thorough job descriptions to define positions where driving is an essential or even marginal function.

• Implement driving record checks during the hiring process and periodically for existing employees where driving is a requirement in their position.

• Determine the appropriate guidelines for what constitutes a safe driver and follow those guidelines when reviewing candidate and employee driving records.

• Create, implement, regularly review, and update driving policies to address emerging risks and compliance requirements.

• Provide comprehensive training programs covering defensive driving techniques, safety regulations, and company driving policies.

• Enforce strict policies prohibiting alcohol and drug use while on the job and while driving, and conduct regular substance abuse screenings.

• Monitor and evaluate employees' driving performance through telematics and other monitoring systems.

Conclusion

Liability when employees drive on company business encompasses various legal, financial, and reputational risks for companies. Prioritizing safety, compliance, checking driving records, maintaining adequate insurance coverage, and ultimately preventing negligent entrustment are critical components of an effective driving policy and procedure. Companies must adopt proactive measures to ensure the safety of their employees and the public while minimizing legal liabilities.

Disclaimer: The information provided in this blog is for informational and educational purposes only and should not be construed as legal advice. Laws and regulations vary by jurisdiction and specific circumstances. Employers and individuals should consult with their attorney or qualified legal professional to determine the appropriate course of action for their particular situation.

Roberta Edwards is a Senior HR Consultant with over 20 years of professional experience. Follow Edwards HR Consulting on LinkedIn and Facebook and read more about Roberta here.