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CAFM Study Guide Reference
CBM - Employer Liability - How It Can
Affect Your Fleet Operations
EMPLOYER LIABILITY– HOW IT CAN AFFECT YOUR FLEET
OPERATIONS
“It’s all about managing risk.”
Employer liability affects fleet in many ways – some more obvious than others.
The basic premise behind liability lawsuits is that the fleet manager and/or the employer ought to
have known better and should have taken greater care to protect the public and prevent injury.
As corporations increasingly are facing litigation related to negligence, it is now more important
than ever for fleet managers to ensure they know what the issues are and take steps to protect
themselves and their employers. Liability does not discriminate between public and private
sector fleets. How the fleet operates, the nature of the business and the policies in place are just
some of the things that will determine the level of risk for the fleet manager.
Three Theories of Employer Liability
1. Respondeat Superior (“Let the Master Respond”)
As one of the most well established doctrines of employer liability, under the Doctrine of
Respondeat Superior, an employer can be held liable for the conduct of an employee who was
acting within the scope of his or her duties of employment. Of importance here is defining what
conduct falls within the "scope" of employment. An employee's conduct is covered if it is of the
kind he or she is employed to perform, occurs substantially within the authorized time and space
limits of the employment and is carried out, at least in part, for the employer’s benefit.
Example:
Imagine you are the owner of ACME Toy Company. You have a small fleet of trucks to deliver
toys and you employ drivers to handle your deliveries. While delivering toys, the driver backs
out of a driveway and runs into a man walking his dog. As the driver was acting within the
scope of his duties, you as the owner/employer may well be found liable for his negligence.
As another example, suppose this same driver has a habit of stopping by his favorite bakery on
the way home after work to sample some of his favorite goodies. You, as the owner/employer,
have no problem with this – in fact, on occasion he has brought you some to sample for yourself.
During one of his stops at the bakery, he is involved in an accident. Even though it was after
hours and he was not acting within the scope of his duties, you may be found vicariously liable
to the other driver even though the conduct giving rise to the suit was well beyond the scope of
your driver’s employment.
Lessons Learned:
To mitigate some of the risks related to respondeat superior, you can
•
Sharply define the scope of employees' duties, clearly delineating proper and improper
use of vehicles for serving your organizations’ needs.
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•
Establish written policies to outline the scope of employee’s duties and tolerate no
deviation from these policies.
2. Negligent Hiring
Unlike respondeat superior, the theory of negligent hiring is not a true form of vicarious liability.
Rather, it is predicated on the employer’s own negligence. The focus of a negligent hiring action
is the employer's failure to use due care when hiring the employee. The negligent hiring theory
significantly expands the scope of employer liability beyond that available under respondeat
superior. Whether the employee was acting within the scope of employment is not directly
relevant and an employer may be held liable for negligent hiring even if the employee's wrongful
conduct occurred outside the scope of his or her employment.
The key to establishing liability in negligent hiring cases is proving that the employer knew or
ought to have known that the employee was unfit for the job. Case law does not provide a
uniform rule relative to an employer’s duty to investigate an employee’s background or driving
record. This determination is dependant upon consideration of things such as the nature of the
employment and the degree of risk to persons who may encounter the employee. Equally, some
jurisdictions hold that an employer may be found liable for negligently hiring an independent
contractor (see Negligent Entrustment below).
Example:
Let us go back to our delivery driver at ACME Toy Company. He is somewhat of a drinker, and
has had a few DUI violations in his career. He has never actually lost his driver’s license, but the
next violation will guarantee his license suspension and possibly jail time. Sunday night he goes
out for a night of drinking with his friends. The next day he reports to work somewhat impaired.
On his first delivery he goes through a stop sign, and is involved in a collision and the driver of
the other vehicle is killed. ACME Toy Company could be liable if it can be proven that they
knew or should have known that the employee was a bad driver, or had a history of driving
convictions.
Lessons Learned:
There are strategies that a fleet should employ to mitigate the risks surrounding negligent hiring.
•
Review Driver History. This should be done before hiring a new employee. Obtain
written authorization from the prospective employee to obtain motor vehicle violation
records. Have them fill out a detailed job application and ask specific questions related to
his or her driving history, such as where they have driven and held drivers licenses
(which state/province).
A review of driver history should not stop there. The organization should have a policy
relative to what constitutes an acceptable driving record. Periodic reviews of all persons
driving vehicles in the performance of their duties should be carried out. In some cases,
this may also apply to contractors.
•
Driver Safety Programs. Every organization should have a driver safety program. Some
elements of the program are:
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©2005, NAFA
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1. Review of accidents to ascertain trends and to target driver training, including
defensive driving courses;
2. Safety policies, including mandatory use of things such as seat belts, cell phone use
policies, hours of service, etc.;
3. Vehicle maintenance and inspection policies;
4. Vehicle use policies – e.g. authorized passengers, personal use, etc.
A driver safety program should also address how to handle those drivers who are considered to
be unsafe. Depending on the situation, this could include remedial driver training, disciplinary
action, loss of wages, loss of driving privileges or even termination. A periodic review of
employee driving records will allow employers to identify the high-risk drivers and deal with
them accordingly.
Negligent Entrustment
Under this theory, an employer may be held liable for the negligent or intentional tort (wrongful
act) of an employee on the basis that the employer breached a duty to use due care in selecting
and retaining only safe and competent employees. The potential scope of liability for an
employer is further expanded because it is not necessary to establish an employer/employee
relationship. Liability is based upon entrustment of a chattel (personal property and, in this case,
a vehicle), either directly or through a third person, to an employee who the employer knew or
had reason to know was incompetent and posed a foreseeable risk of harm to others. To prevail,
the injured party must prove that the employer entrusted a company vehicle to a known unfit
driver and that the accident resulted from the employee's incompetence.
Whether the employee involved was acting within the scope of employment is not a concern in a
negligent entrustment case. The employer's negligent entrustment, not the scope of employment,
forms the premise of the tort. Some elements of negligent entrustment and negligent hiring
overlap each other as described in the examples below:
• The employer knew or ought to have known of the person’s incompetence;
• The entrustment of the vehicle created a risk of harm;
• The employer’s negligence in entrusting the vehicle caused the harm.
An employer’s liability is not restricted to company-owned vehicles. Employee provided
vehicles also present risks. Employers should ensure that employees using their personal vehicle
for work purposes have sufficient insurance, and carry a business-use insurance rider or
declaration.
Many fleets contract vehicle transporters to move vehicles from one location to another. This
can be done by various methods, including the use of flatbed/enclosed trailer, rail, or by hiring a
professional driver. In some cases, a fleet management company may contract a third party to
transport vehicles. In all cases, it is important to obtain copies of the transporter’s insurance
certificates and not take anyone’s word that the carrier is fully insured. Depending on the
situation, the organization and/or the fleet manager may be held responsible for the negligent
actions of the transporter drivers.
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Example:
ACME Toy Company is expanding its sales territory, and is opening a satellite office in
California. The company contracts a vehicle transporter company to move several of its delivery
trucks from its head office in Boston to Los Angeles, California. The vehicles are loaded onto a
flat bed truck and are enroute to California. On the way, the driver falls asleep at the wheel and
is involved in a collision. The driver of the other vehicle is killed and all the delivery trucks are
a write-off. The family of the deceased sues the transporter and ACME Toy Company based on
negligent entrustment. During the course of the trial, it is determined that the transporter had a
long history of citations for hours of service violations from the Federal Motor Carrier Safety
Administration (FMSCA). In this case, the transporter and the ACME Toy Company may be
found liable for negligent entrustment.
Lessons Learned:
The ACME Toy Company may have mitigated the risks involved in this contractual arrangement
by executing due diligence, and more carefully choosing and investigating the transporter in
which they contracted. Fleet managers can obtain safety records and ratings of motor carriers
through the FMSCA (In Canada, Motor Carriers are under the mandate of Transport Canada).
Fleets can also verify a transporter’s record, and hiring policies and obtain copies of their
insurance coverage prior to contracting to them.
Addendum
Canadian fleet managers are challenged further by the enactment of Federal Bill C-45, an Act to
amend the Criminal Code of Canada. Not only are civil remedy liabilities enforceable but new
criminal liability no longer requires “mens rea” (intent). Section 217.1 of the Criminal Code of
Canada now only requires the lack of “due diligence” for a prosecution, which if criminally
convicted, could result in a life sentence.
Every one who undertakes, or has the authority, to direct how another person does
work or performs a task is under a legal duty to take reasonable steps to prevent
bodily harm to that person, or any other person, arising from that work or task.
In Canadian law, all three examples above could result in civil liability, Provincial Labour Act
prosecutions, as well as Criminal prosecution.
Conclusion
Vehicles are tools that organizations need to accomplish a task. Unfortunately, a vehicle can
also become a rolling projectile rocketing down the highway. One of the best things a fleet
manager can do to protect themselves and their employers against potential lawsuits or personal
prosecution is to know the potential risks, and then develop and enforce policies to mitigate those
risks. It is an area that fleet managers can ill afford to ignore.
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©2005, NAFA
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