Since the Colorado Supreme Court’s holding in Ferrer v. Okbamicael in 2017, plaintiffs injured by the alleged negligence of company employees have been unable to bring direct negligence claims against the company after the company employer’s admission of vicarious liability for the employee’s conduct. This common sense streamlined approach has now changed with the enactment of House Bill 21-1188, which went into effect in September of 2021.  Under the Bill, which can be found at Section 13-21-111.5(1.5) of Colorado’s Revised Statutes, a plaintiff’s direct negligence claims against an employer are no longer barred when the employer admits vicarious liability. As a result, plaintiffs may now conduct associated discovery based on those direct claims, such as negligent training, hiring, or supervision of the at fault employee.

The reasoning behind the decision in Ferrer was logical: because those direct negligence claims were necessarily dependent on a finding of the at-fault employee’s negligence, the claims were superfluous and only risked prejudicing a jury when the employer conceded that it would be vicariously liable for the employee’s conduct.  

Take, for example, a plaintiff injured in an accident with a truck driven by an employee of Company X.  The plaintiff decides to sue the employee for his negligent driving and Company X under both (1) a vicarious liability theory; and (2) theories that Company X negligently trained and hired the employee.  For Plaintiff to prove a negligence case regarding the company’s training, he would have to show damages, which would mean proving he was injured by the employee’s negligent driving.  If Company X admitted liability for its employee’s negligence, there would be no point in moving forward with the direct negligence claims because all of the Plaintiff’s damages would only stem from that injury and they shouldn’t change based on who he is suing.  Allowing further discovery and litigation into Company X’s training or hiring practices would only serve to needlessly increase costs and potentially prejudice the jury against both the company and employee as information such as the employee’s driving history that would otherwise be inadmissible becomes relevant in direct negligent claims against his employer.

The Ferrer court recognized this and joined the majority of jurisdictions across the country in holding such claims to be “redundant and wasteful.”  The court recognized the danger that juries would “assess the employer’s liability twice and award duplicative damages to the plaintiff.” And while the statute states that nothing within it permits a plaintiff to recover extra damages for the same injury, in practice, the damage awards will almost certainly rise because of it. 

Indeed, a critical aspect of the Ferrer opinion was that it rejected an exception for those direct negligence claims which claimed exemplary (punitive) damages against the employer.  The court reasoned that because a claim for exemplary damages necessarily requires an underlying negligence claim to base it upon, and because “direct negligence claims against the employer are barred, there can be no freestanding claim against the employer on which to base exemplary damages.”  Because the legislature has overridden the bar on direct negligence claims, Ferrer’s reasoning to disallow exemplary damage claims will also no longer apply. 

Plaintiffs will still be required to make a showing that the employer engaged in fraud, malice, or willful and wanton conduct to support such a claim.  Though certainly, on any occasion in which the plaintiff has evidence that an employee was arguably improperly hired, trained, or supervised, they will almost universally also claim the employer was reckless in doing so and make a claim for exemplary damages.  This no doubt will have a detrimental effect for any individual who in the past has made seemingly small mistakes, including minor traffic infractions, which employers will now have to be hawkish in scrutinizing when making their hiring decisions. 

Ironically, this bill was couched as one designed to “hold employers accountable” when in reality the previous legal framework encouraged employers to admit liability and legally obligate themselves to pay damages on behalf of their employees’ negligence.  Now that incentive is gone.  In its place is a statute born out of the lobbying of the plaintiff’s bar to increase litigation, costs, and damages, all to the detriment of Colorado businesses, big and small.