Another Good Reason to Analyze your Business Automobile Policies and Insurance

By: Kyle D. Kring

You are an employer and your employee is driving home from work when he or she accidentally hits another vehicle, injuring a third party. Do you think your business is legally responsible for the third party's injuries?

Traditionally, an employer would not be liable for the third party's injuries, based on the longstanding "Coming and Going" Rule. This provides that employers are generally not liable for accidents when an employee is coming to, or going home from work. This is because employees are said to be outside the course and scope of employment during their daily commute. Or to put it another way, the act of coming and going to work is for the benefit of the employee, and not the employer. However, a recent ruling by the California Court of Appeals significantly expanded the circumstances in which an employer may be liable for an employee's off-duty automobile accidents.

In Moradi v. Marsh USA, Inc. (2013) 219 Cal. App. 4th 886, the California Court of Appeal ruled that, because an employer required an employee to use her personal vehicle for work-related trips during work hours, the employee was acting within the scope of her employment when she got into an accident which took place while running personal errands on her way home after work. The court found the employee's use of her personal vehicle an "incidental benefit" to the employer. In this case, Judy Bamburger was an insurance salesperson for Marsh USA. As a salesperson, she regularly used her personal vehicle for business. Bamburger left work for the day, intending to stop for frozen yogurt and then go to a yoga studio to attend a yoga class. While Bamburger was running her personal errands, she struck the plaintiff, Moradi, who was driving a motorcycle. Moradi sued Bamburger and Bamburger's employer, Marsh USA, attempting to hold Marsh USA liable for his injuries. Initially, the trial court granted Marsh USA's motion for summary judgment, finding that Bamburger was not acting within the scope of her employment at the time of the accident. The Court of Appeal reversed, holding that Marsh USA could be liable under the respondent superior doctrine.

As stated above, generally an employer is not liable for an employee's actions during the employee's daily commute to and from work in a personal vehicle - a doctrine known as the "Coming-and-Going" Rule. If, however, an employer requires an employee to use his or her personal vehicle for work, the employer can be liable for injuries caused by the employee during her commute to and from work, as well as foreseeable detours during her commute. In this case, Bamburger was required to use her personal vehicle to develop business and visit customers, and frequently gave rides to co-workers to work-related seminars or events. Marsh USA initially provided Bamburger and its other salespeople with company cars, but had switched to a policy requiring salespeople to use their personal vehicles to engage in sales and business development. This placed Bamburger's commute in the long-established "required vehicle exception" to the coming-and-going rule.

Where the Moradi court expanded employer liability was in its analysis of what was "foreseeable" conduct by the employee, Bamburger. Previously, courts said employees with required personal vehicles were still acting in the scope of their employment when they ran brief (foreseeable) errands during their commute, such as stopping at a grocery store to purchase a drink. In this case, however, the Court of Appeal concluded that although Bamberger was running multiple different personal errands, including a yoga workout, her detours were not "so unusual or startling that it would seem unfair to include the loss resulting from it among other costs of [Marsh's] business." Therefore, Marsh USA could be liable.

In light of the Moradi decision, employers should examine whether their business policies might be exposing their business to liability for the automobile accidents involving their employees outside of work. Employers should analyze their written and implicit business policies to ensure that they are not creating a "required vehicle exception" by requiring or allowing employees to use their own personal vehicles during the workday for work related activities. If employees do use their personal vehicles for work duties, employees should ensure that the employer is covered under the employer's general liability insurance policy and/or that their employee has sufficient limits of coverage and the employer is listed as an additional insured under the employee's personal auto policy. It may also be advisable under certain circumstances to prohibit certain employees from running work related errands with their own personal vehicles, especially if the company has a vehicle that can be used to run the errands.

Kyle Kring is a Founding Partner of Kring & Chung, LLP, Irvine office. He can be contacted at (949) 261-8800 or kkring@kringandchung.com.