Fleet Management: Best Practices For Hiring Vehicle Operators
By Josh Helmuth, Managing Advisor
Have you ever heard the comments during the hiring process – “Can they fog a mirror? Okay, they’re hired!” Hopefully not, but in today’s job marketplace, many employers may have exactly that attitude when hiring vehicle operators.
As unemployment continues to decline, more and more employers are challenged with finding qualified workers. In addition to these difficulties in hiring, from a risk management perspective, the law of supply and demand pertaining to potential employees creates a tricky balancing act for business owners.
Specifically, in today’s Auto Insurance marketplace, employers are facing huge cost challenges. Rising insurance premiums, associated with industry claims trending upward and individual claim experience moving the same way, have felt the impact of unwise smartphone usage, distracted driving and heightened road exposure due to work volume.
During the hiring process, fleet owners must be even more aware of the principle of negligent entrustment of company vehicles.
In this case, negligent entrustment is defined as, “entrusting a vehicle to an individual without ensuring the individual has a valid driver’s license,” or, “allowing a person to drive a company vehicle despite the individual’s past driving history – known or unknown,” according to Westfield Insurance.
According to Great American Insurance, employment-related issues arise as a result of negligent entrustment when the driver is ruled incompetent when the employer should have known of the incompetence, when the employer entrusted the vehicle to such a driver within the scope of work or when the driver was negligent and caused the accident. Some cases have not even required that the driver was proven negligent.
Avoiding negligent entrustment is an important business practice from a social responsibility and moral standpoint concerning public safety, but owners also need to be aware of the insurance and tort implications. The result of a negligent entrustment lawsuit commonly includes punitive damages awarded by a jury. Many insurance policies do not cover punitive damages – some states prohibit insurers from covering it at all! Even if an insurance policy does extend coverage, a negligent entrustment lawsuit could easily exceed Auto Liability/Umbrella Limits of coverage for most business owners.
So, what is an employer or fleet manager to do?
- Start at the beginning: Hiring practices need to be consistently followed, making certain that Motor Vehicle Reports (MVRs) are ordered by the employer for review. Also, applicants should list all driving violations or accidents in subsequent years.
- Periodic reviews of driving records are a must – these must be an internal HR practice. Many employers rely upon their insurance agent, or insurance carrier, to verify and review accident reports. Best practices suggest employers and fleet managers should personally conduct a driver MVR review six months after their Fleet Auto policy renews. This will allow viewing the actual information and violations so that a decision can be made based on individual hiring practices of the business and company safety culture.
- Personal use policies concerning company-owned vehicles are a must have. Make sure to note specific restrictions as terms of employment. As with any safety program, communication and repetition of the plan are tied directly to the success of the program. Periodically review safe vehicle operating criteria and behavior with drivers. Establish expectations for the operation of your company vehicles.
An article from Fleet Financials suggests common mistakes employers make that expose their business to loss:
- Not creating comprehensive job descriptions
- Not pulling MVRs on drivers
- Not conducting background checks beyond MVRs
- Not running a post-offer drug screening
- Not providing driver training
- Not having a comprehensive driver conduct policy
- Not disseminating strong cell phone use policies
- Not enforcing vehicle maintenance policies
- Not reacting quickly after an accident
- Not conducting a vehicle safety analysis
Effective claims advocacy, management and communication, along with robust risk management and driver safety programs, will enable employers to be proactive and intentional with their fleet management and good stewards of quality control practices in hiring. In other words, just fogging a mirror is not good enough!