Legal Risks for Delivery Companies and How to Avoid Them

The delivery business has exploded nationwide, including in North Carolina. Whereas a few years ago deliveries among the general public were limited mostly to pizza and online shopping, everything can now be delivered — groceries, medicine, alcohol, and even cars. On-demand delivery services now put more delivery vehicles on the road than ever before, and with that growth comes a corresponding rise in personal injury claims against delivery companies. Here, our North Carolina personal injury defense attorneys break down the legal risks delivery companies face and offer practical advice on how to manage those risks. 

Why Delivery Companies Face Unique Risks

Delivery companies face a combination of risks that most other businesses do not. For starters, operating a motor vehicle is the riskiest endeavor most people engage in on a day-to-day basis. Given that the vast majority of deliveries are completed via driving, there are ample opportunities for accidents. Tight delivery windows can encourage reckless driving, such as speeding, rolling through stop signs, and taking unsafe shortcuts. Furthermore, many delivery companies require drivers to use their own vehicles, which can create insurance gaps. And because most delivery drivers are gig workers, high turnover often means that employers spend less time on training and screening than they would like. 

The Central Battleground: Employee or Independent Contractor? 

Perhaps the most significant issue in personal injury litigation against delivery companies is whether the driver was an employee or an independent contractor. Generally, employers are liable for the tortious acts of their employees; they are not liable for the tortious acts of independent contractors. However, the distinction between an employee and an independent contractor is not always clear. 

Just because the parties refer to the driver as an independent contractor does not necessarily make it so. Instead, North Carolina courts often apply the “right to control” test, which focuses on the extent to which the company controls the manner and method of the worker’s performance of their duties. If the company controls key aspects of the work, such as routes, delivery timing, customer interaction procedures, or performance metrics, courts may be more inclined to find an employer-employee relationship. However, many delivery companies, especially those in the gig economy, now use an app-based model to preserve independent contractor status while still exercising control through mobile applications, algorithmic dispatching, and performance tracking. Plaintiffs often argue that even this level of control creates an employment relationship. 

The determination of whether a delivery driver is an employee or an independent contractor is highly fact-specific and often hinges on minutiae such as app functionality, driver agreements, onboarding procedures, and the level of control the company exercises over its drivers. As such, delivery companies should take care to structure their working relationships so as to avoid inadvertently creating employer-employee relationships. For more information about preserving a worker’s status as an independent contractor, please contact a North Carolina personal injury defense attorney. 

Common Legal Risks for Delivery Companies 

Vicarious Liability for Driver Negligence 

Assuming a particular driver is considered an employee, liability for their negligence will generally flow to the company under a legal doctrine known as respondeat superior. This doctrine holds that employers are responsible for the negligent acts of their employees. So, for example, if a delivery driver causes an accident while making a delivery, the company can be named in any ensuing lawsuit — not just the driver. A major exception to this rule is the “frolic” exception, under which an employer may not be vicariously liable if the driver was engaged in a frolic — i.e., a major departure from their duties — at the time of the accident. However, if the driver was making a delivery on behalf of the employer at the time of the accident, the employer likely will be liable. Delivery companies can reduce their risk of vicarious liability by maintaining proper independent contractor working relationships. 

Negligent Hiring, Training, and Supervision 

Separate from vicarious liability, delivery companies can be sued directly for their own negligence in hiring, training, or supervising a driver. For example, if a company hires a driver with a poor driving record, a history of DUIs, or other red flags, and that driver later causes an accident, the injured party may sue the company for failing to screen, train, or supervise its employees. Delivery companies can minimize this risk by conducting thorough background checks on their drivers, periodically reinvestigating them, and maintaining comprehensive training records. 

Insurance Coverage Gaps 

Most personal auto insurance policies specifically exclude commercial use, including delivery work. That means if a delivery driver carries only personal auto insurance and has an accident while on the job, their personal insurer will likely deny the claim, which can then expose the driver’s delivery company to risk. Commercial insurance policies, rideshare endorsements, and pay-by-the-mile policies can help close this gap, but delivery companies often discover the gap only after an accident has occurred, leaving it too late to fix. Delivery companies can avoid this risk by confirming whether their policies and their drivers’ policies are adequate for their operations. For more information on ensuring your business is adequately protected, please speak with a North Carolina personal injury defense attorney. 

Distracted and Fatigued Driving 

Delivery drivers are at an increased risk of driving while distracted or fatigued. GPS navigation, in-app messaging with customers, photo confirmations at drop-off, and working for multiple delivery companies at once can increase the risk of attention-based accidents. Delivery companies can reduce the risk of these kinds of accidents by establishing clear policies on phone use while driving, setting reasonable delivery windows, and training drivers to recognize signs of fatigue. 

Avoid Getting Sidetracked by Lawsuits With Help From a North Carolina Personal Injury Defense Attorney

Delivery companies are attractive targets for personal injury lawsuits, which can result in costly losses. The best way to avoid such suits is to seek counsel from an attorney experienced in reducing legal risk. To get started, please contact a North Carolina personal injury defense attorney at Harris, Creech, Ward & Blackerby. Call 252-638-6666 or use our online contact form.