Employer Alert: Colorado Supreme Court Narrows Employer Liability in Negligence Cases

The Colorado Supreme Court recently issued a decision that significantly reduces an employer’s liability in cases where both the employer and the employee are sued for injuries caused by the employee while performing job duties.  

In Ferrer v. Okbamicael, 2017 CO 14, decided on February 27, 2017, a pedestrian sued a taxi cab company and the taxi cab driver who struck her while on the job, causing significant injuries.  The pedestrian asserted two types of claims against the taxi cab employer: one based upon the doctrine of respondeat superior, where an employer is indirectly liable for the acts of its employees, and additional direct claims for negligent hiring, entrustment, supervision and training.  The taxi cab employer admitted that the taxi cab driving was acting within the scope of his employment duties at the time of the accident, thereby conceding the respondeat superior claim, but argued that this concession meant that it could not also be held liable on the direct negligence claims.  The Colorado Supreme Court agreed, establishing new law that an employer can avoid direct claims of negligence in this context by conceding that the employee was acting within the scope of employment at the time of the injury.  

The Ferrer ruling therefore results in a trade-off:  While the employer’s admission will result in the employer paying any damages awarded against the employee for negligence, the employer will avoid damages that may have otherwise been awarded for direct negligence claims, such negligent entrustment, hiring, supervision, and training.  As a matter of first impression, the Court reasoned that this trade-off is appropriate because an employer’s admitted liability for an employee’s conduct under the doctrine of respondeat superior is an alternative theory of recovery on a direct negligence claim, such that allowing both types of claims against employers would be “redundant and wasteful.”  This new rule, however, only applies in cases where the plaintiff’s injuries are caused by actions of the employee rather than any actions by the employer directly. 

Significantly, the Colorado Supreme Court went even further to protect employers by ruling that the direct negligence claims are barred even if the plaintiff seeks to recover punitive damages against the employer.  While courts in other jurisdictions have allowed a punitive damages exception to the rule, the Court in Ferrer appropriately found that such an exception is inconsistent with the rule given that punitive damages requests are not separate, freestanding claims and, instead, are part of the barred underlying negligence claim.  

The trade-off established in the Ferrer decision is a good one for employers.  Eliminating the potential for direct liability and exposure for punitive damages claims is an upside to the Ferrer rule that definitely warrants consideration for employers facing negligence claims based upon employee conduct.
  
For any additional information regarding this ruling, please contact Danielle Wiletsky at dwiletsky@wsmtlaw.com.