Verify before giving the keys: Is my Business Protected?
Updated: Jan 21
If you are like many businesses; once an employee is hired, you may let them drive a company vehicle or on-behalf of the business in their own vehicle. But did you remember to verify their driver record before giving them the keys? If not, you may be at risk of losing your business from Negligent Entrustment of an automobile.
Before you have someone drive one of your vehicles, you need to be aware that your organization is responsible for verifying the driver's qualifications. Courts have held that it is the duty of the employer to exercise reasonable care when hiring individuals who may pose a threat of harm to others.
If an employee with a poor, suspended, or revoked license is allowed to operate a company vehicle, or even their own vehicle on company business, and property damage or injuries result from your employee's negligence, the injured party may seek to establish additional liability on the basis of Negligent Entrustment, which can include punitive damages.
Because they are considered punishment damages the courts have upheld that a liability policy does not cover punitive damage awards. Punitive damages are awarded in addition to the actual damages when the actions of the defendant were done with malice or willful disregard to the safety or rights of others. These damages are placed squarely on the financial shoulders of your company.
Under the Doctrine of Negligent Entrustment an employer may be held liable for entrusting a motor vehicle to an employee, if the employer has knowledge, or should have knowledge, that the driver is incompetent, reckless, or inexperienced. In simple terms, the doctrine of Negligent Entrustment requires two elements:
That the defendant carelessly allowed, or entrusted, someone to use an instrument that could cause harm.
That the incompetence of the person in a position of trust was the proximate cause of the injury.
Employer knowledge is the key, and lack of knowledge is not an excuse. The employer is responsible for screening individuals entrusted with a vehicle. Processes and standards should be in place to check a driver's employment background, review MVRs and to enforce driver qualifications.
To help reduce this exposure to your firm it is recommended that you formalize your commercial vehicle safety program by developing driver qualification standards, communicating them throughout the organization, and training your employees on safe driving habits. Driving records of all prospective employees should be checked prior to hire and current employees at least annually.
As a reminder, the Fair Credit Reporting Act protects information contained in driving records.
If you want more information please give us a call.