Corporate Responsibility for Crunk Employees Who are Off-the-Clock

We are living in a corporate world. Tcocktailoday, more than ever before, employees are working more. And like Donna Summer said they work “hard for the money, so hard for it honey…” Any person trying to climb the corporate ladder knows, if you don’t go the extra mile, be prepared to be replaced by someone who will. It is not uncommon for an employee to work 9-5 and then go immediately to a networking or marketing event after hours for which they receive no compensation.

As a result of the increasing burden and demands on employees, many companies offer employee perks such as cell phones, computers and company vehicles. These perks are a win/win – they come at no cost to the employee, and for the employer, there is an added benefit – the employee can easily maneuver from place to place and be accessible which turns into realized profit. Most companies have policies in place providing an employee can only use a company vehicle, phone or computer when they are “on-the-clock” and that these perks are to be used for “business purposes” only. The mix of company perks and after hours expectations create blurred lines with respect to legal liability.

It’s New Orleans, and we all love the Saints. On any given Sunday, you can walk through the Superdome and see countless suites sponsored by corporate entities flowing with laughter, food and booze. Here’s the scenario, a company salesman hops in his company car on a Sunday to pick up some clients and take them to the game. Upon arriving , they all go to the company suite, drink liquor purchased and provided by the company, and after a big win and one too many rounds of tequila shots and singing “stand-up and get crunk”, the employee drives home in the company vehicle causing a devastating accident. Who is responsible? What rights do the victims have? Is the company on the hook?

  • THE INITIAL PERMISSION RULE AND WHAT IT MEANS TO YOU

If you are hurt by a person who is operating a company vehicle, even if they are not technically “on-the-clock” at the time of the accident, you may have a valid claim against the company and/or the insurance entity that insures the company vehicle. Most companies which provide vehicles to their employees are required to carry auto insurance. These companies secure coverage for their company vehicles through what is known as Business Auto or Commercial Fleet Policies. As a general rule, these policies are typically provide more coverage than insurance polices issued to individuals personally. This is important to injured victims because you want to make sure there is adequate insurance to cover your damages. This is also important to the crunk employee because he will need to ensure his negligent actions are covered and he is not personally liable.

Louisiana has a special law in place to protect those who are injured by employees who are operating company issued vehicles even though those employees may not necessarily be performing a function for the company, and even though the employee may be operating the company vehicle in violation of company policies. This special law is known as the “initial permission” rule. The Louisiana Supreme Court recently stated this rule is “crucial” to the public policy of this state as it prevents employees from driving in and out of coverage in company vehicles. The rule furthers the state’s policy of compensating and protecting innocent accident victims from financial disaster, and it also serves to discourage collusion between employers and employees in order to escape liability.

  • WHEN AND WHERE THE INITIAL PERMISSION RULE APPLIES 

Whether the “initial permission” rule will apply will require a legal analysis as to how much control and access the employer gave the employee to the company vehicle. Permission to use the company vehicle can be either express or implied. Under the “initial permission” rule, once consent, whether express or implied, is granted by the employer to allow the employee to use the company vehicle, any subsequent changes in the character or scope of the use do not require the additional specific consent of the employer. In other words, the “initial permission” rule applies, regardless of whether the employee was acting within the contemplation of the employer, and even where use of the vehicle is in violation of the specific instructions or policies of the employer. Below is a list of cases which have found insurance coverage under the “initial permission” rule: 

  1. Pope v. Allstate Insurance Company (finding insurance coverage when employee was intoxicated at time of accident and acting in violation of company policy; employee not in course and scope);
  2. Arceneaux v. Norman (finding insurance coverage when employee was intoxicated at time of accident and acting in clear violation of company policy because employee was given permission to drive company vehicle for deliveries and keep it parked overnight at residence);
  3. Coleman v. United Fire and Casualty Insurance Company(finding insurance coverage when employer gave employee keys to vehicle and allowed employee to drive vehicle to and from work and expected employee to use vehicle for emergency calls any time of day or night; employee intoxicated and not in course and scope of employment at the time of the accident); and
  4. Hampton v. Security Storage and Van Company, Inc. (finding insurance coverage where employee was assigned to designated vehicle but took vehicle in violation of company policy and after hours of employment).
  • IS THE INITIAL PERMISSION RULE A SURE THING?

The short answer is no, the “initial permission” rule is not a sure thing, but it will usually apply. Coverage is only precluded under the “initial permission” rule where deviation of the use of the vehicle amounts to theft or conduct displaying an utter disregard for the return or safekeeping of the vehicle. As noted above, Louisiana courts have found an employee operating a company vehicle while intoxicated and on a personal mission does not rise to the level of utter disregard for the vehicle’s return or safekeeping. This is true even when done so in violation of a written company policy. Accordingly, it is not a valid defense to argue the company’s vehicle insurance policy does not apply when the employee is drinking and driving after hours.

In our game day scenario, Louisiana law would likely find the employee is not technically in the “course and scope” of his employment because he is drinking and driving after hours. But it is likely the court would still find the company’s auto insurer to be liable because the employee had “initial permission” to use the company vehicle even assuming the employer prohibited drinking and driving. Whether the “initial permission” rule will apply in your case can only be answered by an attorney conducting a full legal analysis. We have successfully used the “initial permission” rule to recover for our clients. If you have a question as to whether the “initial permission” rule will apply in your case, #phonecardone at 504-522-3333.