Issue: Are you liable for employees' actions when they run personal errands while on company business?
Risk: A new court ruling says "Yes," raising your legal risks with people who work off site.
Action: Revise your policy to clarify whether employees can conduct personal business on company time.
Your organization is typically liable for injuries caused by employees who are "acting within the scope of employment." You aren't liable when they cause injuries on their own free time. But what about the gray area, when employees run personal errands while on business?
A new court ruling raises your risk in such cases, meaning you could be liable when employees make a slight detour while on company business.
Recent case: While driving on company business, a drugstore manager decided to stop at a gas station for a personal car-repair estimate. In turning into the station, he crashed into another car and injured the driver.
The injured driver sued the drugstore, which claimed it wasn't liable because the manager wasn't acting within the scope of his job when turning into the gas station. But a federal appeals court sided with the injured driver, saying "a proportionately slight or expectable deviation" from the business trip won't erase employers' liability. (O'Shea v. Welch, American Drug Stores Inc., No. 02-3343, 10th Cir., 2003)
3 ways to reduce liability
1. Draft a clear policy that outlines what employees can and can't do within the scope of their jobs, including whether they're allowed to conduct any personal business on company time.
2. Shift liability whenever possible, or tap a better person for the job. For example, hire a courier service to make deliveries, instead of employees.
3. Verify employees' driving records and auto insurance before asking them to drive on business. Consider carrying "employer's nonowned automobile liability" coverage, which can protect your organization from damages caused by vehicles you don't own but that your employees use for business.
Final note: In this case, if the drugstore manager traveled 30 miles out of his way for a car estimate (instead of making a slight detour), the outcome would likely have been different. Reason: When an employee commits what's known as a "frolic and detour" from his original business purpose, the employer typically isn't liable.