Negligent Entrustment and Your Employees' Motor Vehicle Records

Written by mBurse Team Member Dec 19, 2017 6:28:00 AM

As you enter 2020 do you plan to run a motor vehicle record (MVR) check on all your employee drivers? If not, you should. You can reduce your company’s risk profile and prevent costly negligent entrustment suits by adding annual or bi-annual MVR checks to your corporate vehicle policy.

What is negligent entrustment?

Negligent entrustment refers to situations in which a court holds an employer responsible for an employee's actions due to negligence on the employer's part. The legal term for this liability is respondeat superior, Latin for "let the master answer." An example would be when an employee causes an accident while working and it can be proven that the company was negligent in allowing the employee to drive at that time.

Perhaps the employee was driving on a suspended license or had a history of reckless driving. An employer is expected to take all reasonable precautions to ensure that employees can safely carry out their jobs. This includes taking steps to ensure that unsafe drivers do not drive on behalf of the company.

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If your organization has employees that need a car to do their job, it is essential to have a corporate vehicle policy no matter how large or small your organization is. The policy should outline and define what a safe driver is, assign appropriate consequences for moving violations, and designate the frequency of MVR checks.

How do MVR checks protect against negligent entrustment and respondeat superior?

The importance of running MVR checks should not be underestimated. Because driving records can change constantly, MVR checks are necessary to provide insight into employees’ driving records and to deliver predictive driving data. This data can be used to assess a mobile employee’s risk profile. Making sure your employees are safe, responsible drivers is your corporate responsibility.

Incorporating MVR checks into your policy can prevent negligent entrustment lawsuits because this allows you to demonstrate steps taken to ensure safety of employee drivers. If an MVR check identifies an employee as a high-risk driver, you then have the ability to take proactive action by holding that employee accountable for improving his or her driving or by parting ways with that employee before something unfortunate happens.

If an employee causes an accident while driving for the company, the first thing the victim's attorneys will do is pull an MVR report on that driver. If they find warning signs on that record that your company ignored by not pulling MVRs regularly, then they will build a case for negligent entrustment.

MVR checks to predict and manage risks 

An MVR check can reveal such valuable information as traffic violations, vehicular crimes, citations, DUI convictions, driving points, unanswered summonses, and lapses in insurance. Past behavior tends to predict future behavior, allowing you to establish a risk profile for each employee.

Every company, in its corporate vehicle policy, should define parameters for what is and isn’t acceptable in an MVR. Defining MVR parameters reduces risk, allowing you to either retrain or terminate an employee that poses an unacceptably high risk.

One challenge, though, is the different points systems used in different states to assess driver safety when moving violations occur. To use MVR checks effectively, you need to understand these points systems first.

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How to interpret the MVR point system

The reports generated by MVR checks will reveal whether drivers have points on their driving records due to moving violations. Several factors are involved in generating the points system for moving violations such as terrain, traffic, and population density. Because the MVR point system is established by each state, comparing the records of two different employees from two different states can be a challenge.

For example, a 2-point violation in one state might equate to a 1-point violation in another. Some states display even greater disparities. In the chart below, you can see that driving without a license generates 10 points in Texas but only 2 points in California. Some states, such as Kansas, do not use a point system at all. Consequently, it’s very important to create a policy that takes into account differences in each state’s point system. In other words, you need to create a points equalization scale.

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The importance of points equalization for motor vehicle records

If your organization has employees all over the United States, you already know that one-size-fits-all policies create problems. For example, maintaining a single car allowance to address costs that vary by location (gas, insurance, taxes, etc.) ends up treating employees inequitably. In the same way, a one-size-fits-all points policy creates inequities. It will penalize some drivers unfairly and may let riskier drivers slide.

Implementing a points equalization system is vital to giving you an accurate picture of your company’s risk level. While it’s best to implement a points equalization system when designing your policy, you can also incorporate points equalization into your existing policy. First, create your own point system that is based on standardized criteria for determining high-risk drivers. Then create a scale that allows you to accurately and automatically translate each state’s points system into your own.

The effect of MVR points on insurance

As you interpret each employee’s MVR, it’s important to remember that points for moving violations can increase insurance premiums. A person’s driving history is one of the biggest factors in calculating what they pay for car insurance. Insurers also reward safe drivers with discounts. Mobile employees with moving violations may reduce their insurance coverage to offset their personal costs for insurance. In this case your organization’s risk is compounded by at-risk drivers.

For this reason, it’s imperative to verify that employees are maintaining sufficient insurance coverage, especially after an MVR check that reveals a high-risk driver. If an employee reduces coverage to insufficient levels, your organization could be held liable for an accident involving that employee due to respondeat superior. To prevent this, require a minimum level of insurance coverage that far exceeds state minimums, and verify coverage on a bi-annual basis, since most premiums renew every six months.

Protect your reputation with MVR checks

When a company gets held responsible for the reckless actions of employees, it hurts the company's reputation. Employers have deeper pockets than employees, so it makes sense that car accident victims and their attorneys will apply the respondeat superior principle.

That’s why it is vital to stay proactive and use data from MVR checks to provide corrective activities for employees whose risk profiles fall outside company parameters. A negligent entrustment suit can cost your organization more than just time and money—it can also tarnish your reputation for years to come.

Check out our guide to mobile employee risk to learn how you can better mitigate your organization’s risk factors through MVR checks, points equalization, and insurance verification. 

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