When Is an Employer Liable for an Employee's Car Accident?

When an employee causes an auto accident, the employer may be on the legal hook for resulting injuries and property damage.

By , J.D., University of San Francisco School of Law
Updated by Dan Ray, Attorney · University of Missouri–Kansas City School of Law

If you're hurt in an accident caused by an employee who's driving a company or personal auto, can you recover compensation for your injuries (called "damages") from the employer? Maybe yes, depending on the facts of your case.

In some cases, an employer can be held legally responsible for an employee's negligent (careless) driving. In addition, if the employer itself was negligent, the employer can be held liable for its own wrongdoing.

Employer Liability for an Employee's Negligence

Sometimes an employer can be held legally responsible for an employee's negligence, including negligently driving a company or personal auto. Note that the employer isn't being blamed for its own negligence. Instead, the employer must answer for the careless driving of its employee.

In the language of the law, the employer is vicariously liable for its employee's misconduct. The legal theory is known as "respondeat superior," meaning "let the superior answer." For this theory to work, you'll have to show that the driver was:

  • driving negligently
  • an employee, not an independent contractor
  • acting within the scope of their employment, and
  • doing something to benefit the employer.

Driving Negligently

Negligence means failure to use reasonable care under the circumstances. In an auto accident case, failure to use reasonable care often includes:

  • driving too fast for the weather or road conditions
  • not looking carefully for other traffic or pedestrians
  • failing to obey traffic signals, and
  • being distracted by a cell phone, the radio, or a passenger.

You must prove that the other driver's negligence caused you to suffer some personal injury, property damage, or both.

Was the Driver an Employee or an Independent Contractor?

As a general rule, an employer can be held responsible for an employee's negligent acts, but not for the negligence of an independent contractor. Often it's hard to tell if a worker is an employee or an independent contractor. What's the difference?

Here's the basic rule of thumb: An employer gets to control how an employee does the job. For example, an employer might dictate work hours, require work uniforms, or provide employees with the necessary tools and equipment to do the job.

When you hire an independent contractor, you're not concerned with how the work is done, but with the outcome. Suppose you hire a painter to paint your home. You don't tell the painter how many hours to work in a day or provide the painter with ladders, scaffolding, or paintbrushes. You care that your home is painted the way you want it, not how the painting gets done. The painter is an independent contractor, not your employee.

Acting Within the Scope of Employment

Unfortunately, there isn't a clear, simple rule you can apply for this requirement. It might help to start with this question: Was the employee doing their job at the time of the accident? If so, it's likely (though not certain) that the employee was acting within the scope of their employment.

In most auto accident cases, a key factor is whether driving was part of the employee's expected job duties. This doesn't mean the employee had to drive as part of the job every day, or even on a regular basis. It means that the employee's work duties—as dictated by the employer—required driving, at least sometimes.

Doing Something to Benefit the Employer

Here again, there's no clear, "one-size-fits-all" rule. In general, the question is whether the employee was doing something for the employer or was, instead, engaged in a personal activity.

For example, running errands in a personal car during lunch likely would be a personal activity. But if an employee spends their lunch hour dropping off items for work and along the way stops at the dry cleaner, that lunchtime driving might benefit the employer.

Commuting to and from work generally isn't considered on-the-job driving, even in a company car. But if the employee makes work-related stops on the way, or has to drive to and from a job site other than the employer's usual place of business, the driving might legally be for the employer's benefit.

Sometimes You Can Let the Insurers Sort It Out

Most drivers have personal auto insurance coverage. If that's the case, you probably don't need to worry about whether the other driver was on the job when the accident happened. The safest course is to send a claim notice to both the employer's business insurance company and the driver's personal insurer. The two companies will sort out which one has to pay for your damages.

If the other driver is personally uninsured or underinsured (meaning coverage so low that it won't fully pay for your injuries), then the other driver's employment can be an issue. When the only available insurance is through an employer and the insurer argues that the employee wasn't working at the time of the accident, you might need to hire a personal injury lawyer to sort things out.

What If the Employer Is Negligent?

Up to now, we've only talked about cases where an employer is vicariously liable for an employee's negligence. But what if the employer itself is negligent?

Suppose, for example, that a company hires a delivery driver without checking into the driver's accident history. Had the employer checked, it would have learned that the driver had a long history of reckless driving and accidents. One day while on the job, the delivery driver, speeding to "beat" a yellow light, hit and seriously injured a pedestrian.

The pedestrian is likely to claim that by letting the employee drive a company vehicle, the employer was negligent. An often-used legal theory is called negligent entrustment. The specifics of a negligent entrustment claim can vary a bit under state law, but these are the typical requirements:

  • the driver negligently operated a company or personal vehicle, causing some harm
  • the employer provided the driver with a company vehicle or, if the driver used a personal auto, assigned the driver to driving duties
  • the employer knew or reasonably should have known that the driver—
    • wasn't licensed to drive
    • wasn't competent to drive, or
    • had a habit or history of reckless driving.

In a case like this, proving the employer was negligent sometimes can be a challenge. Your best bet might be to hire an experienced lawyer to handle the case.

What If the Employee Alone Is Responsible?

When the employer wasn't negligent and can't be held vicariously liable for an employee's negligence, an employee alone might be on the hook for damages. Let's illustrate with a couple of examples.

Employer Hires an Independent Contractor

Acme Corporation hires Doe to repair an air conditioner. While working at Acme, Doe hops into his car for a trip to the hardware store to get a part for the Acme job. During the trip, Doe negligently runs a red light, hits another car, and injures the other driver.

Is Acme liable to the injured driver? Probably not. For starters, Doe was almost certainly an independent contractor, not Acme's employee. That should take vicarious liability out of the picture.

Acme didn't provide Doe with an Acme vehicle to go to the hardware store, and there are no facts indicating that Acme delegated driving duties to Doe. Long story short: Acme itself wasn't negligent, either.

On these facts, there's no legal basis to hold Acme liable for Doe's careless driving.

Employee Engages in a Personal Activity

Roe works as a salesperson for Blurfco. Blurfco provided Roe, a licensed driver with a clean driving history, with a company car to use while driving on the job. One day while he was on vacation, and without the knowledge or permission of anyone at Blurfco, Roe used the company car to take his family to an amusement park. During the trip, Roe caused a wreck with another car.

Here, we've got two elements of vicarious liability: Roe drove negligently and was a Blurfco employee. But Roe wasn't doing his job or acting for Blurfco's benefit when the wreck happened. The facts don't justify holding Blurfco vicariously liable for Roe's negligence.

We also have two elements of negligent entrustment, because Blurfco gave Roe a company car and Roe negligently caused a wreck. But the facts tell us that Roe was a licensed driver with a clean driving record. Absent any facts indicating that Roe shouldn't have been driving, we can't say that Blurfco negligently entrusted Roe with a company car.

The other driver can't look to Blurfco to recover damages.

A Car Accident Lawyer Can Help

If you were hurt by an on-the-job driver and aren't sure who might be responsible, an experienced car accident lawyer can help. Proving vicarious liability and negligent entrustment can be tricky, so you'll want advice from someone who knows their way around these claims. Here's how to find an attorney who's the best fit for you.

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