Countless employers have heard this story from an employee in a company-owned vehicle that was just involved in an accident. If the accident occurred during work hours, there are few questions and less reason for concern. After-hour and late-night accidents cause the most anxiety for owners and management. “Who was driving my vehicle?” “Was alcohol involved?” “What time was it?”

Employee actions, management responsibility
It is unfortunate but true; poor decisions by an employee can result in legal problems for your company. If an employee kills or injures someone while driving your vehicle, you may be held legally and financially responsible for the accident. Generally speaking, the owner of a business cannot be held responsible for the actions of an employee who is acting “outside the course and scope of his/her employment.” This usually applies to employees operating company-owned vehicles (or one assigned for regular business use) after normal business hours. However, if negligent entrustment can be proven, you may be held liable for damages awarded through legal action. This can include punitive damages, which may or may not be insurable in your particular jurisdiction.

Proving negligence
Immediately following a vehicle accident, the police department will generally do several things. The driver will be tested to determine his blood alcohol level. Next, they will check to verify the driver possessed a current, valid license and run a motor vehicle record (MVR) report to evaluate driving history. Blood alcohol levels close to, at or above the legal limit, multiple moving violations, suspended license, excessive numbers of motor vehicle accidents, a history of DUI’s (driving under the influence) are all examples of circumstances that may provide grounds for negligent entrustment. The theory of “negligent entrustment” refers to giving or entrusting your vehicle to a person who is incompetent or cannot operate the vehicle safely. All of the aforementioned “problems” can be cited as evidence that the employee should not have been allowed to operate a company vehicle.

Consider your options
The best option is to eliminate the personal use of company vehicles as much as possible. Eliminating the use eliminates the exposure. You can also offer employees a “car allowance” in lieu of a company auto, and require them to carry their own insurance.

If the vehicles cannot be eliminated, then take steps to better control the exposure. First of all, establish minimum driver requirements for operation of company-owned vehicles. These requirements may include: Minimum length of employment; current and valid driver’s license; satisfactory accident record; acceptable motor vehicle record; physically fit to operate vehicle; and minimum of 25 years of age.