How A Recently Overturned Colorado Supreme Court Law Affects Employers

September 8, 2021

By: Paul R. Janda

One of the interesting things about employment law is that it often intersects with other fields of law. Paul Janda, of our Litigation Department, brought to my attention a new Colorado law, which is well-known to litigators, but not so much to employment attorneys. In today’s post, Paul tells us about how this new law could affect employers. 

Abstract: This article explores the ramifications of a new statute enacted by the Colorado legislature that overturns Colorado Supreme Court precedent and implicates the hiring and retention practices of employers, especially related to employees who may be involved in accidents with third parties.

When an employee injures another person while working within the course and scope of their employment the injured party can seek recovery against the employer under two theories. Employers—even if they did nothing wrong—can be vicariously liable for an employee’s acts. Separately, the injured party could elect to raise “direct” negligence claims against the employer, such as negligent hiring and retention. For example, if a delivery driver causes an accident, the injured party can recover the full measure of their damages from the driver’s employer based only on the argument that the employee was negligent and was driving in the course of their work. But in addition, the employer might be responsible under theories of direct negligence if the employee had a bad driving record when they were hired, was poorly trained or supervised, or performed in a manner previously where they should have been reassigned or terminated.

Courts do not permit double recovery, meaning that a plaintiff who proves both sets of claims does not generally recover more than if they only prove negligence by one party. However, the two different types of claims are very important for determining what sort of information the injured party can get from the employer during the course of discovery. Discovery is a process in civil lawsuits where each side seeks information from the other. Only relevant information is discoverable. Furthermore, the rules of evidence usually prevent the plaintiff from arguing that an earlier incident shows the employee or employer was negligent in a later incident. So, if a plaintiff only sued the employee for negligence, they could not usually introduce evidence regarding that employee’s past negligent acts. But, by raising a claim of direct negligence against the employer, any adverse information, including information in the employment file, could be presented as evidence of the employer’s negligence. 

To recover in Colorado courts, plaintiffs must prove that the defendants were more negligent than they were. But, it can be difficult for juries to determine fault because both parties often deserve some blame. So, the discovery related to direct negligence claims (the employee’s driving record, for example) can persuade the jury even though it would be inadmissible in a claim against the employee alone. In 2017 in a case called Ferrer v. Okbamicael, the Colorado Supreme Court recognized this rub and adopted a rule followed in several other states  where an employer admits vicarious liability (that the employee was in the course and scope of their employment), direct negligence claims are barred. This rule was lauded by employers because it kept the focus where it should be—on the acts of the employee at the time of the incident.

In 2021, however, the Colorado legislature overturned the Colorado Supreme Court’s decision. Under a new statute, plaintiffs can again have their cake and eat it too by holding employers liable for their employee’s negligent acts and—even where responsibility is admitted—by pursuing claims against the employer that may bias the jury’s perception of what caused the accident in the first place. This new law should inform employers’ policies regarding hiring, training, supervision, retention, and record keeping. 

At Fairfield & Woods, we routinely defend employers from negligence actions and counsel employers seeking to develop practices and policies that help limit potential liability for future claims. We encourage you to contact us with any questions related to this new statute or other matters of Colorado law.