Your Best Employee Gets a DUI. What Now? A Driver Risk Management Guide
Picture this. Your top salesperson walks into your office on Monday morning. He’s one of your best people. Clients trust him. He brings in revenue. He’s on the road every week meeting customers.
And over the weekend, he got arrested for Driving Under the Influence (DUI). Most business owners immediately think about the employee.
Can he keep his job? Can he still drive? What should HR do?
Those are important questions. But there’s a bigger risk-management question:
What happens to your company now?
The good news, if there is any, is that you still have options.
They may not be good options, but they’re still your options. You can evaluate the circumstances, the employee’s responsibilities and the risk, and decide what makes sense.
That can change dramatically once your insurance carrier gets involved.
When the Insurance Company Finds Out First
Here’s how this often happens. At renewal, the insurance company reviews Motor Vehicle Records (MVRs) and discovers the DUI.
The employer then receives a message: This driver is unacceptable. The carrier is requiring a driver exclusion. Suddenly, many of your options disappear. That’s the fundamental issue.
One of the most important principles of driver risk management is to take control of your drivers out of the hands of the insurance company and put it back into the hands of the employer.
The carrier’s job is to underwrite risk. If a driver no longer meets its guidelines, excluding that driver may be a perfectly rational underwriting decision.
But what’s simple for the insurance company can create a major problem for the employer.
Maybe this is a 15-year employee. Maybe driving represents only a small part of the job.
Maybe you can restructure the position or put other controls in place.
You want the opportunity to make those decisions before the insurance company makes them for you.
The objective is not to hide a problem from the insurance company. It is to identify and address the problem before the insurance company is the one bringing it to your attention.
Know Your Drivers. Know Their MVRs.
That’s where proactive driver risk management begins. If your employees drive on company business, you should know what their driving records look like and you should know before your insurance carrier does.
At a minimum, employers should review MVRs annually and before submitting the driver list to the insurance company for renewal.
Imagine having 50 drivers and discovering during your own review that a key employee received a DUI six months earlier.
That’s a problem. But you still have time to evaluate the circumstances, consider your options and make a decision before the carrier sees the record and potentially imposes an exclusion.
A better practice is to review MVRs twice a year, with one review occurring before renewal. That significantly reduces the amount of time a serious change in someone’s driving record can go undetected.
The preferred approach is an ongoing driver monitoring service that alerts the employer when a driver’s record changes.
Instead of discovering a DUI, license suspension or serious violation six or twelve months later, management can address it when it happens.
Think of MVR monitoring in three levels:
- Minimum: Annually, before insurance renewal.
- Better: Twice a year, including before renewal.
- Best: Ongoing monitoring with proactive alerts.
The objective isn’t to catch employees doing something wrong. It’s to get information into management’s hands early enough to do something about it. The sooner you know, the more options you have.
There May Be No Good Answer – Driver Risk Management
Once you discover the DUI, there is no perfect solution. The preferred option, whenever practical, is to move the employee into a non-driving position.
That eliminates the immediate driving exposure while potentially allowing you to retain a valuable employee.
But that’s not always possible. A salesperson may need to visit customers. A superintendent may need to move between jobsites. An executive may travel regularly.
That’s when the choices get harder.
And before making one of those choices, employers need to understand an important legal exposure: negligent entrustment.
In general terms, negligent entrustment may become an issue when an employer knew or should have known that an employee presented an unreasonable driving risk and nevertheless entrusted that employee with a vehicle.
A prior DUI may become an important fact in evaluating that claim, depending on the circumstances.
The next accident doesn’t necessarily have to involve alcohol. If there’s a serious accident, a plaintiff’s attorney may ask: “You knew this employee had a DUI. Why did you continue allowing this person to drive?” That’s a question the employer needs to be prepared to answer.
And simply finding insurance coverage for the employee doesn’t eliminate that exposure. With that in mind, what are the alternatives?
Option 1: Purchase Separate Insurance
It may be possible to purchase a separate auto policy for the employee with the DUI. At least you have insurance.
But the separate policy may have significantly lower limits than your regular insurance program and may not be covered under your company’s umbrella or excess liability program.
And having insurance doesn’t eliminate the potential negligent entrustment exposure. You still made a conscious decision to allow an employee with a known driving issue to continue driving. Think about the trade-off: Increased risk. Potentially reduced limits.
It may be an option, but management needs to understand what it is accepting.
Option 2: Have the Employee Drive Their Own Vehicle
Another option is requiring the employee to use a personally owned and properly insured vehicle. But there is an important distinction.
Without a Driver Exclusion
If the employee has not been specifically excluded, requiring the employee to use a personally owned and properly insured vehicle may preserve an important layer of protection.
The employee’s personal auto policy would generally be the first place to look for coverage, subject to its terms and exclusions.
The employer’s non-owned auto liability coverage may then provide protection for the company’s liability arising out of the employee’s use of that vehicle on company business, again subject to the specific policy terms and endorsements.
This doesn’t eliminate the liability associated with knowingly allowing the employee to drive, but it changes the exposure.
From an insurance standpoint, the company’s non-owned auto exposure generally arises when the employee is using the personally owned vehicle on company business.
That can be a better position than having the employee routinely operate a company-owned vehicle.
With a Driver Exclusion
A driver exclusion can change the equation completely.
Depending on the policy language, the exclusion may apply to that individual even while driving a personally owned vehicle on company business.
The employer may think it has non-owned auto coverage when, for an accident involving that particular employee, it doesn’t. That’s a dramatically different risk.
Before accepting any driver exclusion, the employer and its insurance advisor should understand exactly how the endorsement affects company-owned, hired and non-owned vehicles, as well as any umbrella or excess coverage.
Option 3: Provide a Driver
For a particularly valuable employee, the company may decide to provide a driver.
It’s expensive, but sometimes it makes business sense.
This solution also works much better if the employee with the DUI has not been excluded from the insurance policy. I saw firsthand why.
One of our clients provided a driver for an employee who was excluded from the company’s auto policy.
One day, while working on a jobsite, the employee needed to get to another part of the project. Rather than wait for his driver, he hopped into the truck and drove on a public road to get there.
There was an accident with injuries. The employee was an excluded driver. The client had no coverage for the claim.
The company had identified the problem, established a rule and even paid for someone else to drive.
But human beings don’t always follow the rules. That’s why there’s a critical difference between: “This employee is prohibited by company policy from driving.” and: “There is no insurance coverage if this employee drives.” One is a risk-management control. The other is a coverage restriction.
If the employee violates the first, you may have an employment problem.
If the employee violates the second, you may have an uninsured catastrophic loss.
Put the Decision Back Where It Belongs
None of these alternatives makes allowing an employee with a DUI to continue driving a good idea.
Again, the preferred solution is a non-driving position whenever practical. Beyond that, the choices aren’t particularly attractive.
You can purchase separate coverage. You can consider having the employee drive a personal vehicle. You can provide a driver. Or you may ultimately decide that the employee can no longer perform a job that requires driving.
But there is a major difference between management evaluating those risks and deliberately choosing an option versus having the insurance carrier effectively make the decision through a driver exclusion.
Good driver risk management doesn’t eliminate difficult decisions. It allows the employer to make them.
Don’t Forget the Employee
There’s also a human side to this. A DUI may indicate that an employee is dealing with something larger; substance abuse, stress, divorce, family problems or other personal challenges.
Have the conversation. Understand what’s going on and get the employee help if they need it. That’s good leadership, and it’s also good risk management.
The Bigger Lesson
The whole story isn’t really about DUIs. It’s about who controls your driver risk management program.
Too many employers check MVRs because the insurance company asks for them at renewal. By the time a problem surfaces, the underwriter may already be deciding what happens next.
Instead, know who is driving for your company. Monitor their records. Establish standards. Have a process for responding when something changes.
You may ultimately make exactly the same decision the insurance company would have made. But it should be your decision.
When your best employee gets a DUI, there may not be a good answer. But if you’ve built the right driver risk management process, at least the decision is still yours.
This article is intended for general risk management and insurance education and is not legal advice or a determination of insurance coverage. Coverage depends on the specific policy language and endorsements, and negligent entrustment and other liability standards vary by jurisdiction. Employers should consult their insurance and legal advisors regarding specific circumstances.
