If you own a business or manage employees, one of the scariest phone calls you can get is that one of your workers has caused a car accident. Your first question is usually: am I on the hook for this? The short answer is: it depends entirely on what the employee was doing at the exact moment of the crash. Courts look at a few hard rules to decide whether you, the employer, pay the damages or whether the employee has to handle it on their own.

The main legal principle that can make you responsible is called “respondeat superior,” which is just a fancy Latin phrase meaning “let the master answer.” In plain English, if an employee is doing their job when they cause an accident, the employer is legally responsible for the consequences. This makes sense: you asked them to drive for work, you benefit from that driving, so you should cover the costs if something goes wrong. But the key is that the employee must be acting within the “scope of employment” at the time of the crash. That phrase is the battleground where most of these cases are won or lost.

What counts as within the scope of employment? If your employee is driving from one job site to another, making a delivery, running a work-related errand, or traveling to meet a client, that is almost certainly work. Same if they are driving a company-owned vehicle and following your instructions. In those situations, you are almost always liable for any damage they cause, including injuries to other drivers, property damage, and even their own injuries if they try to claim workers’ compensation. There is no way around it: you hired them, you told them to drive, you pay for the wreck.

But the picture gets muddy when the employee mixes personal business with work. Suppose your employee is on a sales call, finishes early, and decides to swing by their kid’s school to drop off a forgotten lunch. On the way back to the office they run a red light and cause a crash. Are you still liable? Courts call this a “detour”—a minor deviation from work for a personal reason. Generally, minor detours still fall within the scope of employment because the employee is still engaged in the overall work trip. You would likely be held responsible.

Now change the facts: after that same sales call, the employee instead drives two hours in the opposite direction to visit a friend, then heads home for the day. While on that personal trip, they cause an accident. That is called a “frolic,” not a detour. A frolic is a complete abandonment of the employer’s business for a purely personal errand. In that case, the employee has stepped completely outside their job duties, and you are off the hook. The employee alone pays for the damage. The line between a detour and a frolic is blurry, but courts look at how far off the work route the employee went, how long the personal stop took, and whether the employer could reasonably expect that behavior.

Another common gotcha is the “going and coming” rule. In most states, if an employee is driving to work in the morning or driving home after their shift, that is not considered within the scope of employment, even if they are using a company vehicle. The commute is your employee’s own problem. There are exceptions, though. If you require the employee to take the company vehicle home for security reasons, or if the employee is on call and must respond to emergencies, the commute can become part of their job. Also, if you pay them for travel time or reimburse mileage, a court might stretch the scope to cover a commute accident.

What about personal errands during lunch break? If an employee leaves the office at noon to grab lunch and hits someone, that is usually not your responsibility because they are off the clock and doing their own thing. But if they are eating lunch while driving between work sites, that is still work driving. The distinction is whether the employee was “on duty” at the moment of the crash.

There is also a big wildcard: what if the employee was doing something illegal or against your explicit rules? For example, you have a clear policy that employees must not text and drive. Your employee texts, crashes, and injures someone. You might think you are safe because you told them not to do it. In many states, you can still be held liable because the employee was acting within the general scope of their job—driving for work—and your policy does not automatically break the employer-employee connection. The fact that they disobeyed a rule does not erase your liability; it just means you might have grounds to fire them or even sue them later to recover what you paid out.

The bottom line is straightforward: if the employee was doing something that primarily benefited the employer at the time of the accident, the employer pays. If the employee was doing something entirely for their own benefit and completely outside their job duties, the employee pays. As a business owner, your best defense is not to rely on clever legal arguments after a crash but to prevent accidents before they happen. Have a written driving policy, train employees on safe driving, prohibit personal use of company vehicles, and require employees to report any moving violations. Insurance is your safety net, but understanding these rules helps you know who should carry that insurance in the first place.