Memorandum

To: Chief Executive Officer Widgets

From: [Your Name] Legal Counsel

Date: November 7, 2023

Subject: Analysis of Legal Exposure for Driver Conduct

I have been asked to evaluate Widgets’ legal exposure for the conduct of its drivers. In this memorandum, I will summarize the main principles of agency law relevant to the scenario, identify and accurately explain the liability to the business in the scenario, and recommend two to three significant steps that the business should take to limit its legal exposure related to driver conduct.

Summary of Agency Law Principles

Agency law governs the relationship between a principal (the company) and an agent (the driver). An agent is someone who acts on behalf of another person with that person’s authority. The principal is responsible for the actions of the agent while the agent is acting within the scope of their employment.

There are two main types of agents: employees and independent contractors. An employee is someone who is hired by a company to perform a job and is under the company’s control. An independent contractor is someone who is hired to perform a job but is not under the company’s control.

The scope of employment is the range of activities that an agent is authorized to perform for the principal. If an agent commits a tort (a civil wrong) while acting within the scope of their employment, the principal can be held liable for the agent’s actions.

An intentional tort is a tort that is committed with the intent to harm another person. A negligent tort is a tort that is committed without the intent to harm another person, but with a lack of care.

Liability Analysis

In the scenario described, Widgets could be held liable for the conduct of its drivers under the doctrine of respondeat superior. Respondeat superior is a legal doctrine that holds a principal liable for the torts of its employees committed within the scope of their employment.

The scope of employment is typically broad and includes all activities that an employee is authorized to perform for the company. In the case of ride-sharing companies, the scope of employment likely includes driving passengers to their destinations.

In the scenario described, several drivers have had accidents. If these accidents occurred while the drivers were transporting passengers, they were likely acting within the scope of their employment. Therefore, Widgets could be held liable for the accidents.

One driver was also arrested for driving while intoxicated when providing a ride for a company client. This was a clear act of negligence. Therefore, Widgets could be held liable for the driver’s arrest.

The fact that Widgets has no policy for hiring or checking backgrounds could also be used against the company. A jury could argue that Widgets was negligent in hiring drivers and that this negligence contributed to the accidents.

The fact that Widgets allows some drivers to use four company vehicles for transporting large groups could also be used against the company. A jury could argue that Widgets was negligent in allowing drivers to use company vehicles and that this negligence contributed to the accidents.

Recommendations

In light of the above analysis, I recommend that Widgets take the following steps to limit its legal exposure related to driver conduct:

1. Develop and implement a comprehensive hiring and background checking policy. This policy should include requirements for checking drivers’ backgrounds, including driving records, criminal records, and employment history.

2. Provide training to drivers on safe driving practices and company policies. This training should include information on how to avoid accidents, how to handle difficult passengers, and how to report accidents and other incidents.

3. Implement a system for monitoring driver conduct. This system could include monitoring drivers’ driving records, receiving feedback from passengers, and conducting surprise inspections of vehicles.

4. Purchase insurance that covers the company for the torts of its drivers. This insurance should cover accidents, arrests, and other claims that could be brought against the company.

By taking these steps, Widgets can reduce its risk of being held liable for the conduct of its drivers.

Conclusion

The gig economy raises a host of new legal questions about the law of agency for companies utilizing gig workers. By understanding the principles of agency law, ride-sharing companies can take steps to limit their legal exposure for the conduct of their drivers.