Driving on Company Time

Despite the increase in services like DoorDash and Amazon deliveries, businesses still send employees out on company time for errands. Sometimes, you may have a company car they can use, or they may hop in their personal vehicle for a quick trip. Either way, your employee is traveling for business purposes.

What happens if your employee gets rear-ended at a stop sign — or rear-ends another vehicle? A quick trip to the office supply store could lead to a personal injury lawsuit or worse. Before handing your worker the car keys, take a few minutes to review this article and learn about employer liability for employee actions.

Liability on the Clock

A small business is one with fewer than 500 employees. About half of all workers in the U.S. work for small-business owners. Those businesses rely on their workers to carry out many tasks besides the ones on their job descriptions. That can include driving on business trips or running errands, even if that isn't part of their usual routine.

Employers are responsible for all acts of their employees during the course of their duties. This concept, vicarious liability, applies because workers must follow company policy. As long as workers act "within the scope of employment," their employer is liable for any accidents, including auto accidents.

When Work Starts and Ends

Whether an employee uses their own vehicle or a company vehicle, employer liability begins while they are at work. Knowing when an employee is officially working is essential for insurance and work purposes. Some examples help explain this.

Suppose you send a worker to the post office. They use their personal car. On the way back from the post office, they stop for lunch and get into a minor accident in the restaurant parking lot. They return to the office. Their official lunch break began during their trip to the post office and ended after they returned to the office.

When it's time to file the workers' compensation claim, this is a job-related injury. You sent them out, and they were returning to work when the accident occurred. Your employee can file a workers' comp claim unless there are other factors.

Depending on your state laws and auto insurance policy, your employee may not have been at work when the accident occurred. In some states, an employee is only at work when they are on property. If they leave during work hours at the owner's or manager's instruction, they are only covered if they go and return directly. Any side trips take the employee out of the scope of employment.

These rules are very fact-driven, based on the specific business use, if the car was a business vehicle, and if the employee advised the employer about the side trips. If you habitually send your workers on daily trips, discuss your options with a business attorney.

Nonowned Autos

When an employee uses a personal vehicle for business purposes, insurers call it a nonowned auto. Commercial vehicle insurance policies usually cover these nonowned autos on a secondary basis, meaning the employee's own vehicle policy pays first, and the employer's policy covers the remainder.

Depending on the type of damage and the amount of coverage the employee has, employers unaware of this secondary coverage could find themselves on the hook for much more than expected.

Calling, Texting, and Other Distractions

Cellphones are so common today that employers seldom even offer them as incentives. You may have a workplace policy that requires employees to respond to calls from the office or reply to text messages. Today's cars have dashboards resembling F-35 cockpits filled with touchscreen displays and voice-activated entertainment systems. All this means more distractions for drivers.

Distracted driving is a leading cause of accidents today. Although you may have strict policies about drinking on the job, it's harder to have policies restricting cellphone use, particularly if your own policies also require workers to answer the phone when you call.

In some states, texting and driving can invalidate personal insurance policies, leading to competing lawsuits in personal injury claims. The best action is not to call workers if you send them out on errands. You should have a policy against texting or using cellphones in cars during work hours.

Company Drivers

The dividing line between employees who use their own cars as part of their job description and those who use their own cars occasionally is not as clear as insurance companies would like.

In most states, rideshare drivers are independent contractors who carry their own insurance. Salespeople who drive their cars making sales calls are more common. However, rideshare drivers can become quasi-employees if the company requires them to wear uniforms or adhere to particular schedules. Sales workers may be contractors if they can set their own hours or drive their own routes.

To protect your business and keep your insurance premiums safe, keep a few tips in mind when sending drivers out:

• Be sure anyone driving any car has a valid driver's license and insurance. They should have the minimum liability required by your state.

• If they use their personal auto, it should be in good condition with current tags and working lights.

• If you give them use of a company vehicle, it likewise should be in good condition. It should have a current registration and working lights.

• If you have AAA or towing, ensure the employee can access the information.

Your employment contract should have a separate page for drivers. If the driver will use their own vehicle, the contract should contain details about mileage reimbursement, parking fees and tolls, business-related repairs, and other incidentals. You may want a similar liability release for drivers who run brief errands. Consult your attorney about what this needs to contain.

Legal Advice About Employer Liability

If an employee has a car accident on company time, get legal advice immediately. Contact a business law attorney in your area for advice on protecting yourself, your business, and your employees.