New Law Allows Claims Against Employers of Negligent Employees
A couple years ago, the Colorado Supreme Court decided that employers could escape liability for their own direct negligence when one of their employees caused injury.
In Ferrer v. Okbamicael, the Colorado Supreme Court reversed the longstanding principle that people (including corporations) should be held responsible for their own negligence, by holding that an employer’s admission of vicarious liability—an admission that the employer is liable for the employee’s negligence—bars claims against the employer for the employer’s own negligence. Those direct negligence claims included negligent hiring, negligent supervision, negligent retention, negligent training, and negligent entrustment. Those claims were wiped out by the Ferrer decision, essentially insulating employers from being held responsible for their own bad conduct, no matter how egregious the conduct.
The Colorado legislature thought this was a bad decision, and the new law, signed by the Governor on May 17, 2021, will again allow those who are injured to hold employers accountable for their direct role in causing injury.
The Law Before Ferrer v. Okbamicael
Employers are generally held responsible for the negligence of an employee who acts within the scope of his or her employment. This is called vicarious liability. So, when an employee is held liable for causing injury to another person, the employer of that employee must step up and pay the damages caused by the employee, usually though insurance. An employer is therefore held responsible for its employee’s actions when the employee is acting on behalf of their employer.
In addition, before the Ferrer decision, employers could also be held accountable for their own wrongdoing. For example, someone injured in a trucking accident could sue not only a negligent employee driver for causing injury, but also could sue the employer for the employer’s own “bad acts” that led to the injury. For example, if the employer negligently trained the driver, or if the employer knew the employee was a dangerous driver but nevertheless allowed them to drive a company vehicle, a jury could hear facts concerning that conduct, and hold the employer accountable. If the conduct of the employer was deemed reckless or willful and wanton, the employer could also be held responsible for exemplary/punitive damages. The law before Ferrer effectively held employers accountable.
The Law After Ferrer v. Okbamicael
The Colorado Supreme Court, however, decided in Ferrer that, when an employer admits vicarious liability, the employer need not be held responsible for its own conduct, even if that conduct amounted to reckless or willful and wanton conduct.
Thus, even if an employer knowingly hired a reckless, unqualified employee, failed to train and supervise that employee, and allowed that unqualified employee to operate the employer’s equipment (all of which inevitably resulted in the employee causing injury) the injured person would not have any direct claim against the employer if the employer admitted the employee was acting withing the scope of employment. The jury would only ever hear about the employee’s negligence, and the employer would escape being held accountable for its bad conduct.
The New Law – Direct Claims Against Employers Are Allowed
Under the new provisions of C.R.S. 13-21-111.5 (1.5), the legislature walked back the Colorado Supreme Court’s Ferrer ruling, unequivocally stating:
WHEN AN EMPLOYER OR PRINCIPAL ACKNOWLEDGES VICARIOUS LIABILITY FOR AN EMPLOYEE’S OR AGENT’S NEGLIGENCE, A PLAINTIFF’S DIRECT NEGLIGENCE CLAIMS AGAINST THE EMPLOYER OR PRINCIPAL ARE NOT BARRED. A PLAINTIFF MAY BRING SUCH CLAIMS, AND CONDUCT ASSOCIATED DISCOVERY, IN ADDITION TO CLAIMS AND DISCOVERY BASED ON RESPONDEAT SUPERIOR.
IN ENACTING THIS SUBSECTION (1.5), IT IS THE INTENT OF THE GENERAL ASSEMBLY TO REVERSE THE HOLDING IN FERRER V. OKBAMICAEL, 390 P.3d 836 (CoL0.2017), THAT AN EMPLOYER’S ADMISSION OF VICARIOUS LIABILITY FOR ANY NEGLIGENCE OF ITS EMPLOYEES BARS A PLAINTIFF’S DIRECT NEGLIGENCE CLAIMS AGAINST THE EMPLOYER.
This law simply takes the status of personal injury law back to where it was before the Ferrer decision, allowing juries to hold each defendant accountable for their own acts in causing injury. Holding employers directly accountable for their own role in causing injury is critical to, among other things, encouraging employers to make safety a top priority when it comes to hiring, training, supervising, and retaining employees, and when it comes to entrusting employees with the employer’s equipment and vehicles. Ultimately, the law will deter bad conduct by employers and will help save lives and prevent injuries.
The new law, passed on May 11, 2021, and signed by Governor Polis on May 17, 2021, is scheduled to take effect 90 days after final adjournment of the general assembly and will apply to civil actions commenced on or after the applicable effective date of the new law.
When you’ve been injured in an accident, seeking legal help from a personal injury lawyer is critical to making sure your rights are protected. When you need a dedicated, sympathetic, and talented personal injury attorney with a proven track record of success who will fight for your best interests, contact Whalen Hersh today. We’re happy to offer you a free consultation with one of our personal injury lawyers to review the details of your case and discuss your legal options. You can reach us in Denver at (720) 307-2666 or in Colorado Springs at (719) 644-7000 to learn more.