When “Off the Clock” Becomes High Stakes: $4M Verdict Reveals Hidden HR Liabilities

By Victoria Purser | @therealvpofhr

A Texas appeals court just sent a sharp reminder to HR leaders: blurred boundaries between personal time and company liability can cost millions. In a ruling handed down on August 24, 2025, (Rudolph Automotive LLC vs Juarez and Villegas) the court affirmed a $4 million jury verdict involving a post-shift workplace gathering gone tragically wrong—signaling major implications for policies, culture, and legal exposure.

This isn’t just a legal story—it’s an HR wake-up call.

The Case: A Social Gathering, a Life-Altering Accident, and a $4M Verdict

In December 2013, employees at Rudolph Mazda gathered after work for an informal, on-site social event where beer was served. During the gathering:

• Employee Christian Ruiz accidentally struck coworker Irma Vanessa Villegas with his vehicle.

• Villegas suffered a traumatic brain injury and lived in a nursing facility until her passing in 2020.

Villegas’s daughter filed suit, naming the dealership, Ruiz, and the on-duty manager. After an extensive trial:

• The jury awarded $4 million in damages.

• Negligence was split among parties: Ruiz (35%), Villegas (30%), Manager Flores (25%), and the dealership (10%).

• Oddly, the dealership was found not negligent yet still assigned liability—creating a legal contradiction.

The Legal Tug-of-War

• The trial judge set aside the jury’s verdict due to the inconsistency.

• The Texas Supreme Court intervened, ordering the verdict reinstated.

• The trial court then attempted to reclassify Ruiz and Villegas as “within the scope of employment.”

• On appeal, the 8th District Court of Appeals reversed again, confirming the original jury findings were valid and legally supported.

Key Takeaways from the Court’s Reasoning

• Workers’ compensation matters: Employers who opt out can’t use certain common-law defenses, like contributory negligence or co-worker fault.

• Scope of employment is critical: The jury concluded Ruiz and Villegas were “off the clock,” meaning the employer’s liability was limited.

• Policy clarity wins cases: Ambiguity about when employees are acting “for the business” versus “personally” can lead to devastating exposure.

Strategic HR Imperatives: Protecting People and the Business

1. Define “Course and Scope” Boundaries

Policies must clearly state when employees are acting within or outside company business—especially during informal events or after-hours gatherings.

ConquerHR® Insight: Don’t assume employees know the difference between “company time” and “personal time.” Spell it out—consistently and in writing.

2. Reevaluate Your Workers’ Comp Strategy

Choosing not to carry workers’ compensation coverage limits your legal defenses in negligence cases. Without it, the stakes—and liabilities—rise fast.

Pro Tip: If your organization opts out, revisit liability protections with legal counsel to understand exposure points.

3. Set Clear Boundaries for Workplace Social Events

Whether it’s team celebrations, happy hours, or informal on-site gatherings, HR should:

• Define whether attendance is mandatory or voluntary

• Establish policies for alcohol, transportation, and supervision

• Document the non-work nature of events when applicable

4. Train Managers on Social Risk Leadership

Managers often act as culture carriers at events—but they’re also your liability multipliers if expectations aren’t clear. Provide them with simple guidelines for:

• Setting behavioral expectations

• Managing alcohol responsibly

• Drawing lines between work-related and personal activity

5. Build Policies That Eliminate Contradictions

Contradictory policies and practices increase both lawsuit risk and appeals exposure. If you declare something voluntary, make sure it’s treated that way in both behavior and documentation.

What This Means for HR Leaders

This case is more than a cautionary tale—it’s a strategic opportunity. As HR leaders, we are stewards of policy clarity and cultural alignment. By tightening event guidelines, clarifying liability, and training leaders, we can:

• Protect our employees

• Protect the business

• Build a culture where safety, trust, and boundaries coexist

HR Action Checklist

✅ Audit your policies for after-hours events and on-site social gatherings

✅ Confirm your workers’ comp coverage strategy and legal implications

✅ Document where liability begins and ends—communicate it clearly

✅ Equip managers with proactive risk and culture leadership tools

Build Risk-Ready, People-First Cultures

At ConquerHR® and HRLearns®, we help HR pros and leaders learn how to design systems and strategies that mitigate risk without killing culture.

If you’re ready to audit your policies, strengthen your leaders, and create clarity that protects both people and business, we’re here to guide you.

→ Book a Strategy Session with Suzanne or Victoria→ Explore HR Leadership Training→ Join the HRLearns™ Community

Join us September 15, 2025, 11 AM - 12 Noon ET (10 AM CT | 9 AM MT | 8 AM PT) as Wendy Sellers, The HR Lady, presents Employee Benefits Updates: What HR & Employers Must Know Under Public Law 119-21 (The OBBB, "One Big Beautiful Bill"). This is one you cannot afford to miss.

Final Word

Boundaries protect more than liability—they protect people. When the lines between “on the clock” and “off the clock” blur, HR holds the pen that draws them back. Clarity is your strongest defense—and your greatest leadership tool.