Using the Employee’s Car for Business

Can Employees Use Their Own Car?

“Some of my employees use their own car either as part of their job or maybe just to run errands for me. Are there any problems with this?”

My HR Survival Tip

The legal issues tended to be clearer when an employee was using a company car but companies are now frequently asking employees to use their own car. Regardless of who owns the car, the basics are the same. The moment an employee is on the road for company business, your company becomes the “deep pockets” if there is an accident. It won’t matter whether or not your employee has insurance; the question is, do you? Your only safety net is doing due diligence to ensure only safe drivers are on the road for you.

If driving is part of the employee’s job, the need is obvious. However, don’t ignore the occasional driver. It’s easy to forget about that employee who runs errands for the company, such as picking up lunch for a meeting, going to the store to pick up needed office supplies or coffee, or dropping the mail off at the post office on the way home from work. If you have an employee behind the wheel, your company is at risk.

A recent lawsuit (Moradi v. Marsh USA, Inc., 2013) highlighted this fact for California companies. An employee used her own car to meet with prospective clients at various times. One day, after finishing work, she was on her way to a yoga class before going home and collided with a motorcyclist. Not surprisingly, the motorcyclist sued both the employee and her employer.

In the past, companies were only held responsible for an employee’s accident when the employee was actually working (on company time). The company argued to have the case against them dismissed since the employee wasn’t working at the time of the accident and the court agreed even though both the motorcyclist AND the employee fought the dismissal. The motorcyclist appealed that decision.

During the appeal hearing, it was argued that the company relied on the use of the employee’s car for business purposes and, therefore, the company received an “incidental benefit.” As such, it was argued that the company remains responsible. The court agreed after determining that the employee’s trip to the yoga studio was merely a minor deviation on her trip home and the deviation needed to be “unusual and startling” for the company to avoid liability. The case is now headed to trial court to determine the company’s and employee’s responsibility for damages.

You’re in the jungle… defend your territory by making make informed decisions about who you put on the road, regardless of whose car is used. Also check that your liability insurance covers employees driving on company business.