Operations

Driver Damages: Who Pays? What’s Legal?

Posted on July 8, 2011 by - Also by this author

Financial and Moral Responsibilities
In a perfect world, the person who caused the damage would ask for an estimate to be obtained and offer to pay for the damage done. However, those days of accepting moral responsibility seem to be long lost. The bottom line is, if the person that caused the damage is your employee, you are responsible for the damages caused by your employee not only to your property but to the property of others. This is one of the risks associated with owning and operating a business. It is the same reason why employees are content working for someone else. They don’t want to have the risk associated with owning a business.

Negligence
In many states, laws protect employees against being charged for loss, breakage or damage caused by them unless it can be shown that such damage resulted from negligence. At fi rst appearance, if a chauffeur or driver backs into a pole, it would appear that he was “negligent” in checking to see what was behind him before backing. However, in a court of law, a judge might not see it the same way. In fact, if you didn’t see the incident occur or captured it on video, you won’t even be allowed to discuss your opinion of negligence because you have no fi rst-hand knowledge of whether your employee acted negligently. But if you can document on video that your driver jumped in a vehicle, turned the engine on, slammed the vehicle in reverse, and spun the tires with enough force to produce smoke from burning rubber, you might have a case.

The Accident Fund
Many operators nationwide have created so-called “accident funds.” Various methods are implemented such as drivers “voluntarily” contributing to a fund that retains enough money to cover an insurance deductible for a large claim. Others are used to pay for actual damages and avoid insurance claims altogether. Some funds are co-mingled with multiple drivers putting money in one account and some operators just take deductions from drivers until they have $500 or $1000 in a damage account and return the money when the driver quits. While many operators engage in this, it doesn’t make it legal. A new driver just hired who at fi rst refuses to sign a document authorizing deductions for damage, but then does anyway, could easily be construed in court as being “coerced” into signing as a condition of employment. This may not be viewed by a jury as a “voluntary” agreement, but something a reluctant employee felt he must do to get the job. Consult with an attorney before creating an accident fund to make sure it is legal.

Damage Collection
Many operators deduct from employee earnings to cover damage costs. Even if the employee has signed an agreement allowing this, it can be challenged in court. The fact that “everyone does it” is not a good defense. In states such as California, having such an agreement does not change state law. The state labor law prohibits the collection of earnings from an employee based on “shortage, breakage or damage” caused unless it can be proved it resulted from “gross negligence.” By the time you hire an attorney to prove gross negligence existed, you probably are going to spend more money on legal expenses than you have deducted from your employee’s check. If the employee decides to take you to labor court for your illegal actions, you may be paying additional legal fees and a judgment against you with fi nes, penalties and interest added in addition to the amount you withheld.

The state labor law prohibits the collection of earnings from an employee based on “shortage, breakage or damage” caused unless it can be proved it resulted from "gross negligence."

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