Negligent Entrustment

DUI (Driving Under the Influence), vehicular homicide, and intoxicated manslaughter. These are terms that should concern anyone allowing employees to operate vehicles or who provides them with “demos.” The behavior and actions of your employees can have a direct impact on you, and your business. You can be held legally and financially responsible for accidents and injuries caused by employees while operating your vehicles. The theory of “negligent entrustment” presumes that you have given or entrusted your vehicle to a person who is incompetent or cannot operate the vehicle safely.

Generally, as the owner of a business, you are not held to be responsible for the actions of an employee who is acting outside the course and scope of his/her employment with you. This usually applies to employees who are operating a company-owned vehicle (or one assigned for regular business use) after normal business hours. However, if negligent entrustment can be proven, you may be liable for whatever damages are awarded. This can include punitive damages, which may or may not be insurable in your particular jurisdiction. There are numerous circumstances, which could lead to a claim of negligent entrustment. For example:

This has been the best sales month of the year. Employees in one department exceeded their goal by over 30% and the manager is taking the entire staff out for the evening as a reward. On the way home from the celebration, one of the employees hits and kills a small child.

Was this “outside the course and scope of his/her employment”? Was negligent entrustment involved? The answer depends. Was this “party” endorsed by management, even though company policy states that employees are not to drink alcoholic beverages and operate vehicles? Does this employee have past traffic violations or DUIs that were disregarded or excused because he or she was a “good” employee? Did the employee appear to be intoxicated the night of the party? Were others at the party aware that this particular employee was intoxicated? If the answer to any of these questions is “yes” or “possibly,” there may be grounds for negligent entrustment. These are steps that can be taken to help prevent a negligent entrustment situation.

Before employment:

Develop a comprehensive Employee Handbook that addresses substance abuse, use of company vehicles, driver safety, etc.
Have a written policy stating that operating company vehicles while under the influence of alcohol, controlled substances or other drugs that could affect safe performance, is prohibited.
In accordance with applicable laws, check employment references, criminal records, and motor vehicle records.

After employment:

Annually review the driving records of employees who are allowed to use company vehicles.
Do not allow employees who have known or current substance abuse problems, or poor driving records, to operate company vehicles.
Verify that your policy concerning use of company vehicles is being followed.