Employees often find it convenient or even necessary to use their personal automobiles to perform job tasks. Because of the enormous liability risks associated with personal motor vehicle use, recent decisions imposing and negating employer liability when employees engage in driving diversions or misconduct suggest a need to review and update companies’ governing policies and employee training.

In Engler v. Gulf Interstate Engineering, Inc. (July 2012), the Arizona Supreme Court negated employer liability for an accident that occurred as the employee was returning to his hotel after dinner during an extended business trip. Because the employee was engaged solely in personal activities at the time of the accident (personal meal during off-duty hours), the Court concluded that it would be unfair to hold the employer liable under those circumstances. In contrast, a California jury in Smallwood v. Huber (August 2011), held a school district liable for an accident involving an intoxicated off-duty teacher traveling a day early to a conference (not required for his job, and for which he was paying his own expenses) in order to see his son. The jury and trial judge held that because the school district gave the teacher a paid day off to attend the conference, and because the accident happened during paid time off, there was a sufficient nexus to his employment to hold the school district liable.

In seeking financial recovery for significant personal injury claims in which the responsible driver/owner has limited insurance coverage, plaintiffs’ attorneys are also suggesting in their blogs and complaints that employers should be held liable for accidents caused by their off-duty employees’ “distracted” driving caused by business-related cell phone calls and/or texting. These efforts are supported by recent cases (e.g., Zivali v. AT&T Mobility, 2011 WL 1815391 (S.D.N.Y. 2011)) and public agency reports (Cong. Research Service Rpt., Sept. 12, 2011) stating that non-exempt employees have a potential right to compensation/overtime compensation when they respond to work-related phone calls/e-mails while “off-duty.” When these types of off-duty activities lead to “distracted” accidents, the tangential work-relationship may be sufficient to create employer liability, or the employer may at least find itself a named defendant in the litigation.

Given these trends and exposures, employers would be wise to review and update their personnel policies and/or handbooks to: (1) prohibit “distracted” driving, whether during the business day or during off-hours with respect to “business”-related matters; (2) prohibit employees from operating motor vehicles for employment-related activities after having consumed alcohol, drugs, or prescription medication that might affect their ability to safely operate a vehicle; and (3) confirm that the employee’s personal automobile insurance coverage will be primary to the employer’s coverage whenever possible under governing law and the employee’s anticipated “omnibus insured” coverage clause. Employers may also wish to consider establishing minimum liability limits for their employees’ automobile policies to help provide appropriate protection.