You own a business. One of your employees is driving to meet a client, runs a red light, and crashes into another car. The other driver is injured. Their car is totaled. They miss work for three months. Now they are looking for someone to pay their medical bills, lost wages, and pain and suffering. That someone could be you.
The legal principle that makes employers responsible for accidents caused by employees during work is called vicarious liability. It is not complicated. If your employee is acting within the scope of their job when they cause a car accident, you are legally responsible for the damages. This is true even if you did nothing wrong. You did not tell them to run a red light. You did not hand them the keys to a faulty vehicle. None of that matters. The law says the employer bears the cost of the employee’s mistakes made while doing the employer’s business.
The key question in every case is whether the employee was on the clock and doing something that furthers your business when the accident happened. If the answer is yes, you are on the hook. This includes driving to a meeting, making a delivery, picking up supplies, or running an errand you asked them to run. It also includes driving between work sites, such as a construction worker driving from one job to another. Travel that is part of the job is considered within the scope of employment.
The most common exception is the commute. If your employee is driving from their home to your office in the morning, or from your office back to their home at night, that is generally not your liability. The so-called coming-and-going rule protects employers from accidents that happen during the ordinary commute. But there are exceptions. If you pay your employee for travel time from home to the first job site, or you provide them with a company vehicle that they take home, the commute may become part of the job. Courts look at whether the employer has control over the travel and whether the travel benefits the employer.
Another gray area is the lunch break. If an employee leaves the office to get lunch and causes an accident, the outcome depends on whether they were still acting within the scope of employment. Generally, a personal errand like grabbing a sandwich is not work. But if the employee is driving to meet a client over lunch, or if the employer requires them to eat on the go, the accident might be covered. The more control you exercise over the employee’s activities, the more likely a court will find you liable.
Your liability also extends to accidents caused by an employee who is not driving your vehicle. If an employee uses their own car for work purposes, and you have authorized them to do so, you can still be held responsible. This is common for salespeople, real estate agents, and delivery drivers who use personal vehicles. The fact that the car is not yours does not shield you. The law focuses on what the employee was doing, not what they were driving. If you knew or should have known that the employee was driving for work, you are exposed.
There is a second layer of liability that goes beyond vicarious liability. That is negligent hiring, training, or supervision. If you hire someone with a history of reckless driving, or you fail to train them on safe driving practices, or you ignore reports of dangerous driving, a court can find you directly negligent. This type of claim does not depend on whether the employee was acting within the scope of employment. It is about your own failure as an employer. For example, if you know your delivery driver has three DUIs and you still put them behind the wheel, you are asking for trouble. A jury will hold you accountable.
Insurance is your first line of defense. Your commercial auto policy should cover vehicles you own. But if employees use their own cars, you need non-owned auto liability coverage. That coverage pays for accidents caused by employees driving personal vehicles on company business. It is relatively cheap and absolutely necessary. Without it, you are self-insuring against a risk that can easily exceed a million dollars in damages. Umbrella liability policies can provide additional protection above your auto and general liability limits.
What happens if the accident is caused by an employee who is not supposed to be driving at all? Suppose you told them to stay in the office, but they decided to drive to a client anyway. In most states, the employer is still liable if the employee was doing work, even if the employee disobeyed a direct order. The law cares about whether the act was within the general scope of the job, not whether the employee followed instructions. Disobedience is not a defense unless the employee was on a frolic of their own—a complete detour for personal reasons. A short detour to pick up dry cleaning on the way to a client might still be considered within the scope of employment. A four-hour side trip to visit a friend in another state would not be.
The bottom line is straightforward. If your employee causes a car accident while doing anything related to their job, you can be sued. You will likely lose. The best protection is to screen drivers, enforce clear driving policies, require valid licenses and clean driving records, and carry adequate insurance. Do not assume that because you did not cause the accident yourself, you are safe. In the eyes of the law, your employee’s hands are your hands.
