According to the National Highway Transportation Safety Administration, highway accidents accounted for 37,461 deaths in the U.S. in 2016. Moreover, a recent study by Motus, a vehicle management and reimbursement platform, found that 40% of all motor vehicle accidents are work-related and cost employers a staggering $56.7 billion in 2017, taking into account medical expenses, property damage, increased insurance premiums, and lost productivity.
While liability insurance is an important way for employers to address that risk, it’s by no means a panacea. Trucking companies can and should be doing more to lessen the likelihood of accidents in the first place. And given that the vast majority (94%, according to NHTSA’s study) stem from driver-related actions or inactions as opposed to equipment malfunctions, one of the most important ways of doing so is to ensure that the individuals who drive in connection with their employment (including those who do so for a living) are safe drivers.
Trucking companies that carefully and continuously monitor their drivers are not only better positioned in their defense of catastrophic accidents but are also much less likely to find themselves in that position to begin with. Additionally, these companies often have a much lower risk profile than their peers and can leverage that fact in their negotiations with their insurance providers.
The Xerox Example
In 2009, Eduardo Delgado, an employee of Xerox, was driving a company vehicle when he struck and killed 63-year-old Elvira Gomez in California as she crossed the street on her way home from church. Delgado was driving under the influence of alcohol at the time and had a history of at least two prior DUIs.
Mrs. Gomez’s adult children and husband filed a wrongful death lawsuit against Xerox, arguing among other things that Xerox was negligent in allowing Delgado to drive a vehicle without first checking his Motor Vehicle Report (“MVR”)—a fact admitted by Xerox—which would have revealed his prior DUIs. In fact, had Xerox checked Delgado’s driving record, it would have discovered that his license was actually suspended due to his DUIs. After a lengthy trial, the case ultimately settled, with Xerox agreeing to pay Ms. Gomez’s family $5 million for their loss.
Unfortunately, the Xerox case is not an outlier; it is one of many in which companies have been forced to pay millions of dollars in damages due to accidents caused by the employees or contractors they put behind the wheel. The legal theories upon which these companies are held liable vary from case to case and from state to state, but they share some common themes.
As a general rule, employers are vicariously liable for any motor vehicle accidents caused by their employees under the doctrine of respondeat superior, which imputes the conduct of the employee to his/her employer under agency principles.
Of course, there could be exceptions to the rule, including, for example, if the employee is operating the vehicle outside the scope of his/her employment when the accident occurs. But generally speaking, employers—and their insurers—will be held responsible for any damages stemming from their employees’ accidents.
Who is Liable?
At the same time, an employer could also be directly liable to the injured party(ies) if the employer’s own independent negligence was the proximate cause of the injuries. This liability is distinct from vicarious liability in the sense that the latter is premised on the employer’s master/ servant relationship with its employee, whereas the former is premised on the employer’s own actions or inactions.
This type of “direct” liability is at the heart of the matter, and it’s precisely the issue that Xerox faced in its lawsuit. It is also the type of liability that can open the door to punitive damages (i.e., those meant to punish the company for its egregious conduct) on top of compensatory damages already awarded to the injured party.
The most common direct-liability theories in highway-accident cases are negligent hiring, negligent selection, and negligent entrustment. Under these theories, the injured party alleges that the company was negligent in allowing its employee/subcontractor to operate a motor vehicle, and, but for that decision, the accident would never have occurred.
Trucking companies that engage independent contractors to operate motor vehicles on their behalf rather than employees may not be vicariously liable for the contractor’s operation of those vehicles, but this depends on a number of factors, including, for example, whether the state law at issue considers the operation of a motor vehicle to be an “inherently dangerous” activity and whether companies have “non-delegable duties” with respect to their operation.
Additionally, pursuant to federal and state leasing regulations, motor carriers who contract with independent-contractor owner-operators are generally vicariously liable for any accidents caused by those owner-operators as a matter of law. And regardless of whether companies utilize employees or independent contractors to operate vehicle, the companies could still be directly liable for damages stemming from the companies’ own negligence. Some state laws, but certainly not all, provide that an employer who is vicariously liable for its employee’s conduct cannot be separately liable to the injured plaintiff under a theory of direct liability.
In addition to damages stemming from highway accidents, companies that hire or engage unsafe or unqualified drivers to operate “commercial motor vehicles” also face regulatory fines and other enforcement action. The Federal Motor Carrier Safety Regulation (FMCSA) regulates the operation of “commercial motor vehicles” in interstate commerce, defined to include self-propelled or towed vehicles used on a highway to transport passengers or property when the vehicle:
- Has a gross vehicle weight rating, gross combination weight rating, or gross weight of 10,001 pounds or more.
- Is designed or used to transport more than 8 passengers including the driver for compensation, or more than 15 passengers including the driver not for compensation.
- Is used to transport a placardable quantity of hazardous materials.
Thus, generally speaking, any company or person—regardless of whether they are a traditional motor carrier—that operates a vehicle or vehicles fitting any of these descriptions for a commercial purpose in interstate commerce is subject to the FMCSA’s safety oversight.
Federal Requirements
The FMCSA’s safety regulations put a host of requirements on those who operate commercial motor vehicles. Part 391 addresses driver qualification and, in particular, imposes a duty on entities who hire or otherwise engage drivers to ensure they meet the minimum driver-qualification standards set out in that Part. Notably, in order to be qualified under the regulations, a driver must:
- Be at least 21 years old.
- Be able to speak and read English sufficiently to converse with the general public and to respond to official inquiries.
- Be able to safely operate the type of commercial motor vehicle he/she operates.
- Be physically/medically qualified to drive.
- Have a valid license, appropriate for the type of vehicle he/she operates.
In addition to verifying a driver’s qualifications prior to allowing him/ her to operate a vehicle, trucking companies also have a responsibility under the regulations to maintain a qualification file for each driver and to periodically update the information in that file to ensure that the driver continues to be qualified over the course of his/her relationship with the company.
By way of example, the regulations mandate that companies run a check (at least annually) of each driver’s Motor Vehicle Report (MVR) in each state in which the driver has held a license over the past three years, and to review the MVR to ensure that the driver has a valid and appropriate license and has not incurred any moving violations or been involved in any accidents that might disqualify him/her from operating under the company’s safety policy or the regulations.
In sum, the stakes, which for the reasons discussed in the preceding section are high enough for companies whose employees or contractors operate vehicles that are not subject to federal and/or state motor carrier safety regulations, are even higher for those that are. Whether it be through increased road safety, greater efficiencies or decreased liability costs, trucking companies must ensure they are codifying what it takes to find the right operators for their vehicles. When lives are at stake, nothing is more important.