negligent entrustment
noun | negligent en-trust-ment |
Def: the entrusting of a dangerous article (as a motor vehicle) to one who is reckless or too inexperienced or incompetent to use it safely; also: a theory or doctrine making one liable for injury caused by a party to whom one negligently entrusted something
Auto insurance is the only major line of coverage to see significant increases this year, and that’s due in large part to the rise in negligent entrustment lawsuits. Juries are more and more likely these days to award large verdicts to plaintiffs who can make their case based on an employer’s failure to act, whether it be performing motor vehicle background checks on their employees, administering driver safety programs, or both.
Negligent entrustment claims are attractive for a plaintiff’s attorney to take on because they allow a jury to assess punitive damages in nearly every state in the U.S. A guilty verdict can, and often does, result in a multi-million dollar settlement. The recent examples below happen to come from large corporations, but make no mistake—small and mid-size businesses are just as much at risk of losing a costly legal battle.
Xerox lost a $5 million lawsuit involving an employee with a history of driving while impaired. The employee fatally struck a pedestrian on her way home from church. The company had never reviewed the driver’s motor vehicle record, which showed him to have two previous convictions.
Coca-Cola lost a $21 million verdict involving an employee who caused an accident while on a business call using a hands-free device, which complied with Texas law. The award was based on the company withholding information and statistical data from employees regarding the dangers of using a cell phone while driving. This underscores the importance of administering an ongoing, consistent driver safety program.
Domino’s Pizza lost a $32 million verdict involving a pizza delivery driver who lost control of his vehicle and caused a fatal accident. The company did have a policy requiring regular inspection of personal vehicles used to carry out company business, but did not enforce the policy. The plaintiff was able to prove that the driver, who earned a mere $7.25 an hour, was delivering pizza on worn tires.
Safeguard your business by not only having a well-defined and clearly communicated policy covering driver and vehicle safety, but also be able to prove that the policy was understood by employees and that the company was consistent in how the program was carried out.
What constitutes a sound driver safety policy in the eyes of the law?
In today’s litigious environment, companies must stay up-to-date on best practices for safe driving. It’s also critical that the policy define consequences when there is a failure to comply. Today, a sound policy should require acknowledgement and address:
| ·Training requirements | ·Definition of authorized use of company vehicles |
| ·Accident reporting and investigation process | ·Driver conduct expectations |
| ·Cell-phone use/distracted driving | ·Vehicle maintenance |
| ·Impaired driving | ·Drowsy driving |
| ·Speeding | ·Seat belt usage |
There are other considerations, too, such as:
- Ensure that your company consistently performs drug screens on an ongoing basis; not just for new employees.
- MVR checks, both when the employee is hired and annually. It is important to stay up-to-date on this as it can change.
- Background checks in compliance with Fair Credit Reporting Act, which provide additional information relevant to your decision to qualify a driver.
- Ongoing and updated driver safety training. This should include training on the specific vehicles, on company policies and enforcement, risk-based training based on loss trends, and corrective training based on driving record.
- Americans with Disabilities Act (ADA) compliant job descriptions. A comprehensive job description can aid your defense of the “should have known” argument by demonstrating that there was not a gap between a company’s requirements and the driver’s experience and certifications.
- Accident reporting and investigation is critical to your defense.
- Employers must be made aware of any medication an employee is taking for illness or injury that could potentially impair their ability to drive a vehicle.
- Employee vehicles (personal or fleet) must be maintained and inspected annually, with records securely stored in the event of a negligence claim.
- Common sense management. An employer must walk the walk to avoid a negligent entrustment claim. For instance, do not have a policy that forbids cell phone use while driving, while simultaneously allowing an employee to call in to the office while driving.
The bottom line is this: With more cars on the road and more technology advances available to improve driver safety, the cost of an appropriate driver safety program is minimal compared to the risk the company is accepting by failing to have one.
