Restaurant Industry’s Temporary Transition to Take-Out Delivery Business Creates Liability Concerns

5/18/2020
Thomas J. Cabral By Thomas J. Cabral, Joseph Monroe II

The bartender who once served those wings and that craft beer from behind your neighborhood bar may now be delivering directly to your front door. COVID-19’s devastating impact has led to the mandated closure of restaurants in many states across the country. This has forced many establishments to transition to the take-out delivery business to generate revenue and stay afloat. To further assist this enterprise, many jurisdictions keen to assist the restaurant industry have passed legislation allowing, with restrictions, the offsite sale and delivery of alcoholic beverages. This has opened an opportunity for servers and bartenders sidelined by the response to COVID19 to be repurposed as drivers delivering food and drinks to customers’ homes.

For restaurants that typically do not deliver food or beverages, doing so now provides a revenue stream and keeps its employees working rather than laying them off. As such, the use of third-party delivery services may be an unappealing option. In addition, using former bartenders and servers, rather than third-party drivers, allows restaurant employees to keep customer tips. Of course, these employees are accustomed to this, and would especially benefit from an American public looking to assist those most affected by COVID-19. A restaurant’s eagerness to access this potential income stream, however, may lead to unintended liability concerns.

Because restaurants are responsible for their employees’ actions taken in the course and scope of employment, the drivers’ coverage under the restaurant’s insurance policy is a paramount concern. Any insurer is likely to require, at a minimum, an active driver’s license and a relatively clean driving record. Prior to putting any employee on the road, therefore, the restaurant must contact their insurer and determine whether its employees are covered for accidents while making deliveries.

Even in cases where the delivery driver uses a personal vehicle to make deliveries, the restaurant remains exposed to liability under the doctrine of respondeat superior. To ameliorate this exposure, some companies more regularly engaged in the food delivery business enter into an agreement with the driver stating that the driver’s personal insurance shall provide primary coverage for any liability incident. While such an agreement may offset some of the restaurant’s liability exposure, it is not a failsafe option due to the possibility that the driver’s personal carrier, if the driver is even insured at all, may exclude coverage for incidents occurring in the course and scope of the driver’s employment. Exclusions for the use of any vehicle while an insured is “employed or otherwise engaged in any business” are commonly found in personal auto policies. This scenario reinforces the necessity, as outlined above, of ensuring that the restaurant has appropriate coverage in place and that such coverage would extend to its drivers before they are put on the road.

Of course, establishing such coverage is also in an employee’s best interest in the event there is a gap in coverage for any injuries or damage to the employee’s person or property. Restaurants that hastily transition bartenders and servers to delivery drivers without first ensuring insurance coverage may find that they are directly liable for their driver’s actions under respondeat superior, but without any insurance to cover losses.

Even if coverage is properly in place, restaurants may face increased exposure due to potentially viable claims for negligent hiring, training, and supervision. A primary concern is that the hiring process for bartenders and servers may not involve review of the applicant’s driving record. Even if it did, an employer may not think to perform a new search before allowing its employees to assume new roles as drivers. If a bartender or server’s driving record is sufficiently checkered, and the restaurant knew or reasonably should have known this, then the restaurant may well face exposure for putting an incompetent driver behind the wheel. A similarly supported claim for negligent entrustment may also be pled if the driver uses a company car.

Finally, the offsite delivery of alcoholic beverages implicates the issue of liquor license liability. Many states expressly legislate how and when liquor permit holders may be held liable for injuries to third parties caused by individuals whom the permit holder has served alcohol (see rule here). Such legislation generally prohibits license permit holders from serving noticeably intoxicated or underage individuals. Many responsible liquor license permit holders understand their liability and train their employees accordingly.

However, under the exemption granted to liquor permit holders by many states, including Ohio, allowing for the delivery of offsite alcoholic beverages, the permit holder’s ability to enforce age and amount restrictions is severely diminished, but its liability exposure is not (see rule here). The Ohio rule, for example, specifically provides that liquor permit holders remain “. . . subject to all liquor laws and rules including hours of operation, minimum age requirements, and the prohibition against sales to intoxicated persons.” Even well trained bartenders and servers are obviously in a better position to evaluate one’s age and level of intoxication on the premises than over the telephone or while standing on a front porch. At a minimum, then, any employees used as delivery drivers must be trained not to deliver alcoholic drinks to noticeably intoxicated or underage individuals. Despite taking these measures, the undeniable reality is that the newly promulgated system is vulnerable to abuse. Restaurants must be wary.

In almost all jurisdictions, the standard imposed on one accused of negligence is that of reasonableness. Determination of what is reasonable behavior may well shift with the advent of COVID-19 and its aftermath, but it will not provide a free pass. At the very least, all restaurant owners should check the driving record of any potential delivery driver, ensure their liability coverage, and engage in additional training so as to take all 1 See Ohio Revised Code § 4399.18. 2 Ohio Administrative Code, rule 4301:1-1-13, Emergency suspension of sales of beer, wine, mixed beverages, and spirituous liquor for on-premises consumption. Expansion of sales for off-premises consumption. (April 7, 2020). reasonable precautions to prevent the delivery of alcohol to underage or intoxicated individuals.