Prevent claims of negligence at your dealership

Picture this: A technician took a vehicle home overnight for an extended maintenance check. The next morning, the technician was driving the vehicle more than 20 mph over the speed limit, veered into the other lane, and caused a head-on collision, resulting in the death of another driver.

The technician was also in possession of a firearm during the incident and driving history records revealed four prior accidents and six speeding violations. The technician also had a criminal history of unlawful gun possession, burglary, aggravated violence and kidnapping.

Or consider this scenario: The General Manager of a dealership employed a General Sales Manager (GSM) without conducting a background check, which could have exposed his criminal history spanning multiple states, including felony assault, larceny and embezzlement. Subsequently, the GSM initiated a relationship with an employee that soured over time, culminating in an assault by the GSM at the dealership.

The employment of the GSM was terminated once leadership learned of the assault. Upon meeting with the employee and the employee’s mother, the dealer reassured them that they would be safe and encouraged them not to file a restraining order against the former GSM. Additionally, the dealer promised to take necessary action to ensure that the GSM would leave town. A few days later, the GSM arrived at the employee’s parents’ home in search of the employee, where he proceeded to confront and ultimately kill the employee’s father.

These horrific stories are actual large loss examples that illustrate just how quickly the actions of one employee can have devastating consequences for your dealership. By establishing comprehensive hiring procedures and continually monitoring employee behavior, you can avoid situations like these and help protect your dealership from negligence lawsuits.

What is negligence?

Employers have a responsibility to make sure their employees are trustworthy and qualified to perform job duties. As revealed in the examples above, a failure to uphold this obligation could result in unnecessary harm/death, the loss of staff, a tainted reputation and/or legal action. Claims of negligence can take multiple forms and involve both new and seasoned employees.

• A negligent hiring claim can be brought against an employer who does not detect or prevent avoidable harm due to a lack of pre-employment screening.
• Negligent retention occurs when an employer fails to terminate an employee when they knew or should have known the employee posed a danger to others.
• Negligent entrustment is another legal concept that involves trusting an individual with a dangerous instrument while knowing they might use it in a risky manner. For example, an auto dealer could be found liable for negligence if an employee with an unsafe driving history was allowed to operate a company vehicle and was in an accident.

Inquire before you hire

The scenarios serve as reminders that applicant screening practices are simple yet crucial protections from potential large losses. With a few routine steps, your dealership can help verify the quality of current and potential employees.

First and foremost, implementing a consistent hiring process is key to making sure no applicant slips through the cracks. With a trackable, documented and organized system, your team can know where every applicant is in the hiring process, and important checks will not be overlooked.

Use a reputable vendor to conduct background checks. A thorough pre-employment background screening can reveal information that an applicant may not have disclosed during an interview, such as a criminal history or a concerning driving record.

Verify the resume and contact the references of all applicants considered for a position at your dealership. Even if a background check comes back clean, there may be a professional history you want to know about as an employer. A resume and reference check can also confirm that a job applicant has the skills and qualifications they claim to hold.

Conduct a road test for any applicants who will drive as part of their regular job duties to ensure they follow the rules of the road safely. A post-offer physical examination is also important for employees, such as parts drivers, who may be asked to lift heavy objects.

Check MVRs for all employees who will drive company and/or customer vehicles as part of their regular job duties. This can uncover any past vehicle-related violations and prevent the hiring of dangerous drivers.

Conduct an alcohol/drug screen and review the results prior to putting anyone behind the wheel or performing safety related tasks.

Taking these precautions may prevent you from inviting risk into your dealership. Even if an accident does occur, processes like these can help verify that you did your due diligence in screening employees.

Consider this:

• 70% of workers have lied on their resumes.¹
• 80% of workers have lied during a job interview.²
• 1 in 3 Americans have a criminal record.³

Without checking references and background, it's easy to be fooled by an employee’s resume or interview responses. Even if an employee intentionally lied about their background or qualifications, your dealership can still be held liable for any incidents that occur.

Proactive policies can protect your dealership

Once you find the right person to join your team, it’s important they understand your dealership’s standards and expectations. Required training can help communicate workplace policies and protect your dealership from claims of negligence. Zero-tolerance policies toward workplace violence, alcohol/drug use on the job, theft, and other inexcusable behaviors should be reinforced.

For employees who consistently drive company vehicles, conduct driver safety training periodically. Doing so every six months gives you a better understanding of their behaviors on the road and provides you with the information to make necessary decisions. Check MVRs regularly to ensure employees are also operating vehicles safely outside work. In the case of a violation, take necessary disciplinary action, which may include the revocation of driving privileges.

Once training is completed, require employees to sign an acknowledgement form that indicates they agree to comply with your dealership’s policies. In the event of a negligence claim, this form can serve as further proof that you took the necessary measures to educate employees about appropriate behavior and actions.

Take all complaints against your employees seriously and conduct in-depth investigations. Take appropriate action after an investigation is completed, which may include increased supervision, training, or termination of employment, if warranted.

Additionally, you should never give legal advice. Refer any inquiries to the proper authorities or an attorney.

Proactive policies may not always prevent incidents from occurring, but they show you are serious about maintaining a safe environment and can limit your liability in the case of a claim. The steps you take after an accident are just as meaningful as those you take to prevent one.

Implementing thorough hiring practices alongside robust employee training can significantly mitigate risks and demonstrate your dealership’s commitment to maintaining a safe and compliant workplace. Nonetheless, it’s important to review your insurance policies to ensure you have the proper protection in place. In the event of a claim, you want to be confident that your coverage is structured to address a potential large loss.

Resources to reduce your risk

• Zurich has training programs for every dealership employee. With in-person, online and live virtual training, we can help you maintain a safe and responsible dealership staff. Learn more about our training services.
• For additional risk management and loss prevention information, visit Zurich’s Automotive Dealer Resources hub.

This article originally appeared in the Fall/Winter 2024 issue of Dealer Principal magazine.

1. ResumeLab. “The Truth about Lying to Get a Job [2023 Data].” 3 October 2023. 
2. Ibid.
3. National Conference of State Legislatures. “Criminal Records and Reentry Toolkit.” 31 March 2023.