Aside from the related theories of negligent hiring, negligent retention, and negligent supervision, Minnesota employers may be held liable under the theory of negligent entrustment when providing a vehicle to an employee or other third party whose negligence causes an accident. An employer’s legal responsibility for negligent entrustment is founded upon two liability theories. The first theory is one of strict liability and is created by statute. The second theory is based on the common law tort of negligent entrustment. An employer/employee relationship is not required for either of these theories of liability to be applicable. Thus, the driver does not have to be acting within the scope of employment in order for liability to attach to the employer under a negligent entrustment theory.

Strict Liability for Negligent Entrustment (Minn. Stat. § 169.09)
Strict liability for negligent entrustment arises under a Minnesota statute commonly referred to as the “Safety Responsibility Act.” The elements to be proved under the strict liability statute include:

1. The motor vehicle must have been operated within the State of Minnesota;
2. The motor vehicle must have been operated by any person other than the owner; and
3. The motor vehicle must have been operated with the express or implied consent of the owner.

Once the plaintiff has established these three elements, the operator, if an accident occurs, shall be deemed the agent of the owner of the motor vehicle. Minn. Stat. § 169.09(5)(a) (2012) (“Whenever any motor vehicle shall be operated within this state, by any person other than the owner, with the consent of the owner, express or implied, the operator thereof shall in case of accident, be deemed the agent of the owner of such motor vehicle in the operation thereof.”).

While agency principles typically rely on whether the operator was acting within the scope of employment, the Minnesota Supreme Court has stated that under Minn. Stat. § 169.09 (formerly, Minn. Stat. § 170.54) liability is “predicated upon agency arising out of the scope of consent rather than the scope of employment.” Pluntz v. Farmington Ford-Mercury Inc., 470 N.W.2d 709, 712 (Minn. Ct. App. 1991) (citing Reliance Ins. Co. v. Stack, 289 N.W.2d 71, 74 (Minn. 1979)) (emphasis added).

With respect to consent, “Minnesota courts have followed the ‘initial permission’ rule.”‘ Bates v. Armstrong, 603 N.W.2d 679, 681 (Minn. Ct. App. 2000) (interpreting the Minnesota Safety Responsibility Act). Under the “initial permission” rule, when an owner gives permission to another person to use his/her vehicle, “major departures from the initial scope of permission, short of conversion or theft, do not relieve the owner from vicarious liability for the permittee’s negligent use of the vehicle.” Id. In other words, the owner cannot circumvent liability by placing limitations on the other person’s use of the vehicle. Id. (“Liability depends not on the scope of permission, but on whether permission was given in the first instance.”).

In Milbank Mut. Ins. Co. v. U.S. Fidelity & Guar. Co., 332 N.W.2d 160 (Minn. 1983), a construction company allowed one of its employees to use the company truck to drive home from the worksite. The employer, however, gave the employee specific instructions not to go ‘”joyriding.”‘ Id. at 162. When the employee arrived home, he decide to take his wife and child on a “‘test drive”‘ of the vehicle. Id. It was during this “test drive,” that an accident occurred. According to the Minnesota Supreme Court, despite the conditions the employer attempted to place on the employee’s use of the truck, under the Safety and Responsibility Act, the employer was ultimately liable for the accident. Thus, if the driver has consent from the motor carrier to use the vehicle, the motor carrier is liable for the driver’s negligence regardless of whether the accident occurred within the scope of the driver’s employment or in violation of certain conditions the employer placed on the use of the vehicle.

It should also be noted that the courts have held that proof of ownership by the employer establishes a prima facie inference of consent; this inference can be rebutted by evidence of no consent at the time and place in question. Reliance, 289 N.W.2d at 74. Thus, the employer, as owner of the vehicle, will have the burden of proving the absence of consent whenever its vehicles are involved in an accident.
In summary, the strict liability claim is a creature of statute that creates liability whenever any individual entrusts another with a motor vehicle. This liability claim relies on the element of consent rather than on the scope of the driver’s employment. This particular theory of recovery does not deal with whether the employer knew or should have known that the driver was unqualified to drive the vehicle. Under strict liability theory, it does not matter whether the driver was qualified, because liability is created when consent is given. Because liability attaches following consent, employers should be extremely careful in deciding when and how their employees can use company vehicles.

Negligent Entrustment (Common Law)
In addition to the Safety Responsibility Act, Minn. Stat. § 169.09, Minnesota courts have recognized a common law (judge made law) theory of negligent entrustment. In Minnesota, negligent entrustment has been defined as a separate wrongful act and creates direct liability to the entrustor (employer/motor carrier). In order to establish a common law claim of negligent entrustment, the plaintiff must demonstrate the following elements:

1. The authorizer had at least temporary control over the vehicle;
2. Authorization was given to another to use the vehicle;
3. The authorizer knows or should have reason to know that the authorized person is not qualified to drive the vehicle; and
4. The authorized driver caused injury or damage by negligent operation of the vehicle.

 
Early cases recognizing a claim for negligent entrustment held that where the negligence of the operator of a vehicle is reasonably foreseeable, the owner has a duty to take steps to prevent such operation. See Illinois Farmers Ins. Co. v. Tapemark Co., 273 N.W.2d 630 (Minn. 1978). Under the current rule, the entrustor (employer/motor carrier) is liable if it entrusts operation of the vehicle to a person whom the entrustor could have foreseen would operate the vehicle in a negligent manner. Axelson v. Williamson, 324 N.W.2d 241 (Minn. 1982). In order to hold the entrustor liable to an injured third party, the entrustor’s negligence must be accompanied by negligence on the part of the driver. The duty of the entrustor “runs directly to those who might be put at risk as a result of the negligent entrustment.” Lim v. Interstate System Steel Div., Inc., 435 N.W.2d 830, 833 (Minn. Ct. App. 1989).
Interplay Between Negligent Entrustment and Vicarious Liability Theories
If an employment relationship does exist between the owner of the vehicle (employer) and the driver (employee), a Minnesota employer can be liable under both a “negligent entrustment” theory and a “vicarious liability” theory. In other words, vicarious liability and negligent entrustment liability are not mutually exclusive. Lim v. Interstate System Steel Div., Inc., 435 N.W.2d 830, 833 (Minn. Ct. App. 1989) (‘”Once it is determined that the [person] at work is a servant, the master becomes subject to vicarious liability for his torts. He may, of course, be liable on the basis of any negligence of his own in selecting or dealing with the servant.”‘). Accordingly, Minnesota courts permit plaintiffs to submit both a vicarious liability claim and a claim for negligent entrustment to the jury, even if the employer admits to strict liability. This can be extremely damaging, because the plaintiff may introduce evidence of prior accidents or misconduct to demonstrate a pattern of negligence under the common law negligent entrustment theory. This evidence often proves to aggravate liability, and may also inflame the jury and increase damage awards as well.

Takeaways for Minnesota Employers
The negligent entrustment claim is such that the employer can be found liable even if the driver is not acting within the scope of employment at the time of the accident. Whenever the employer entrusts a driver with a vehicle there is the potential for liability whether or not the driver is “on duty” or performing work for the employer. This is true because the statutory doctrine of negligent entrustment is not based on the existence or scope of an employment relationship but merely requires the plaintiff to prove that the employer owns the vehicle and provided the employee with “consent” to operate it.

Because Minnesota employers can be liable for accidents and injuries caused by their employees whenever they are operating company vehicles under the theory of “negligent entrustment,” they should carefully screen the qualifications and safety record of all employees who will operate vehicles. In appropriate cases, this may include conducting Minnesota criminal background checks, implementing a Minnesota drug and alcohol testing policy, and checking DMV records for prior automobile accidents if the employee will be operating a vehicle on behalf of the employer.

The employer should comply with the EEOC Guidelines on Criminal Background Checks, the Fair Credit Reporting Act, and Minnesota Drug and Alcohol Testing in the Workplace Act when screening job applicants and employees to minimize the risk of negligent entrustment liability.

If your company needs assistance developing a vehicle safety policy, employee handbook, employee screening program, discipline and discharge guidelines, or drug and alcohol testing policy, contact one of the Minnesota employment law attorneys of Trepanier MacGillis Battina P.A.

About the Author:
Minneapolis employment attorney Craig W. Trepanier practices extensively in the area of employment law and has experience drafting pre-employment screening procedures, criminal background check programs, drug and alcohol testing programs, and FCRA compliance programs for Minnesota employers. Craig may be reached at 612.455.0502 or craig@trepanierlaw.com. Trepanier MacGillis Battina P.A. is a Minneapolis employment law firm located in Minneapolis, Minnesota.

Additional Information on Minnesota Employer Liability for Employee Negligence:
This is the fifth in a series of posts about the potential liability of Minnesota employers for accidents and injuries caused by their employees. This series applies to all employers, but is particularly relevant to Minnesota motor carriers, Minnesota household goods moving companies, and all Minnesota employers who require employees to operate vehicles in the course of their employment. The series includes:

Vicarious Liability of Minnesota Employers for Auto Accidents Caused by Employees
Employer Liability for Negligent Hiring Under Minnesota Law
Employer Liability for Negligent Retention Under Minnesota Law
Employer Liability for Negligent Supervision Under Minnesota Law