It’s not unusual for employees to drive as part of their jobs. Whether it’s to get supplies, drive to another office, or participate in marketing events, these job responsibilities are common. But, as an employer, have you thought about the potential liabilities or ramifications for these activities? If not, this could be a problem.
Simply put, when driving time is work-related, employees must be paid for their time. The only exception to this is regular commute time, in which the employee is traveling from home to work and vice versa. You may pay for these job-related tasks using a different rate than the employee’s normal rate of pay, but the rate must be minimum wage or higher.
Under the respondeat superior doctrine, employers can be vicariously liable for negligent acts or omissions by their employees during the course of employment. As a result, victims may have the right to sue employers for damage employees cause while on the clock, which would include such things as auto accidents while traveling for work. For example, if an employee drives his or her car to run an errand, and in the process gets into an auto accident and injures someone, the victim could sue the employer for damages. In fact, victims often view suing employers as a more lucrative endeavor.
If you are going to have employees drive for work, be sure to confirm that they have insurance coverage and continually reconfirm this when that insurance is scheduled for renewal. Make sure the coverage covers them if they’re driving for work, and check with your business auto or liability insurance carrier to ensure your coverage will cover employees who drive as part of their job with you.
In some cases, insurance riders may need to be added to one or both insurances in order to have full protection in the event of an accident. Then, if an accident does occur, the employee’s insurance will be primary, and your insurance will be secondary and used only if the employee’s insurance is not enough to cover the entire cost of the damage.
If an accident does occur while your employee is driving for work and the employee is injured, you will need to file a claim with your workers’ compensation carrier. This represents a work-related injury, and the employee is eligible for benefits. This insurance would be secondary; therefore, it would be used only when all coverage is drained from the employee’s auto insurance coverage.
It’s important to cover details regarding traveling for work in a policy that all employees are required to read and acknowledge. The policy should state that proof of auto insurance is required, that parking or speeding tickets will not be the responsibility of the employer, that communications must be hands-free (i.e., no cell phone use while driving), and so on. This should also cover compensation (that the driving will be paid and at what rate, whether regular or different), and how employees should track their time.
Surprisingly, no law requires an employer to reimburse an employee for mileage, gas, or any other expense related to the use of the employee’s car for work travel. The one exception to this is if the travel expenses reduce the employee’s wages to below minimum wage. For example, if an employee earned $500 for the week and the travel expense for the same week was $475, given that there is a $25 difference, this employee has not earned minimum wage or higher for his or her time. Thus, the employer must pay for some or all of the expenses to make the employee salary whole again.
While it may seem like the best solution is to abandon the practice of having employees drive for work-related events and activities, try to avoid reacting out of fear and completely upending your methods. Employees travel for work all the time and problems caused by this are not very common. For the most part, everyone cruises (no pun intended) happily along. Just know the risks and do your due diligence to ensure everyone is covered appropriately in case something does go wrong.
Tim Twigg is the president of Bent Ericksen & Associates and Rebecca Boartfield is an HR compliance consultant. For more than 30 years, the company has been a leading authority in human resources and personnel issues, helping dentists successfully deal with ever-changing and complex labor laws. To receive a complimentary copy of the company’s quarterly newsletter or to learn more, call (800) 679-2760 or visit bentericksen.com.