With business travel volume expected to return to 96% of pre-pandemic levels in 2023, now’s a good time to review your firm’s business travel liability risk.
In a ResourcefulFinancePro webinar, Dr. Jim Castagnera, an attorney affiliated with the Washington International Business Counsel and arbitrator for the U.S. District Court for the Eastern District of Pennsylvania, spotlighted two areas of business travel liability companies like yours need to be aware of:
- workers’ compensation, and
- what happens if an employee causes damage to a third party during a business trip.
Workers’ comp & business travel liability
You’re familiar with how workers’ compensation insurance applies to workplace injuries, but did you know there’s business travel liability with workers’ comp? There are some important exceptions to the general rule that workers’ comp coverage is continuous for business travelers. Castagnera said workers’ comp is not likely to cover injuries that occur:
- because of behavior by the employee that’s illegal or against an establishment’s rules
- during days an employee has extended a business trip for a workcation
- during a trip that’s for personal reasons, meaning the trip would’ve been made regardless of a business assignment, and could be canceled for any reason, or
- after an employee has clearly stepped aside from their role as a representative of the company to attend to personal matters.
Castagnera noted that the last one, the “abandoning employment” exception, is not something all courts agree on.
For example, in the 2020 Bache v. TIC-Gulf Coast decision, a North Carolina court ruled in favor of an employer that was sued by a worker assigned to an out-of-state project who became partially paralyzed in a car accident. The court said there was no business purpose involved in the circumstances of the accident.
But Castagnera said the employer dodged a bullet because the crash happened after the worker had visited a potential rental property to live for the duration of the work project. In a different jurisdiction, he said, the outcome could’ve been different because the injuries wouldn’t have happened had there not been a need to find work-related living arrangements.
Business travel liability & ‘respondeat superior’
Business travel liability comes into play if a third party comes after you for negligence or bad behavior on the part of an unsupervised employee on the road. The legal term for it is respondeat superior, Castagnera said, and it’s based on a presumption that the employer is benefitting from the traveling employee and therefore shares the blame.
In a 2017 court case, an employee fell asleep while cooking egg rolls on a stove in his hotel room, which led to a grease fire that caused over $140,000 in damage. The employer’s insurance carrier covered the claim, but then turned around and sued the company.
The employer tried to get the case dismissed on the grounds that the employee was outside the scope of his employment when the fire started. But the judge disagreed, saying: “This determination should be made after a full opportunity to discover the facts surrounding the incident.”
“Once you hear the word ‘discovery,’ you know that you or your insurance carrier is running up some big legal fees,” Castagnera commented.
The court considered a previous decision that employees on business travel are actually in continuous employment day and night, and that lodging in a hotel, preparing to eat, and going to or returning from meals can count as activities that are incidental to employment.
Explaining the thinking, Castagnera said, “If you’re sending somebody on an extended business trip or an overnight trip, they’re going to have to eat. They’re going to have to sleep someplace.”
On top of this, employees may be engaging in more risky behavior than you think when they’re on business trips. Castagnera cited an On Call International survey of 1,000 business travelers that found:
- 27% binge drink while on work-related trips, and
- 11% said they’ve picked up a stranger at a bar while traveling for their jobs.
You depend on your road warriors to act in a responsible and safe manner. So if you haven’t already established a code of conduct or expectations for employees while they’re out representing the organization, now’s the time to huddle with HR and your CEO to create one, and have your people read and sign it.
Insurance considerations
Your business travel liability can also depend on what your workers’ comp and general liability insurance policies say.
Castagnera offered these tips:
- Make sure your workers’ comp insurance addresses injuries while traveling. Does it address international travel?
- Know the limits of your workers’ comp and general liability coverages. What do they say about outside-of-business activities, such as family workcations?
- If you allow workcations as a benefit, make sure your general liability coverage addresses family members/companions of employees.
Protecting the company
Castagnera also suggested having a waiver/release for employees and, if applicable, adult family members/companions to sign before leaving town on a business trip (employees would also have to sign on behalf of any accompanying minor children).
They can say something like: “I, on behalf of myself, my heirs and personal representatives, hereby release [your company name] and its directors, officers, employees, successors and agents from any and all claims and causes of action for inconvenience, damage to or loss of property, medical or hospital care, personal illness or injury, or death arising out of my participation in [description of the trip, including dates and destinations].”
