Legal Update - September, 2003
Have You Considered Adopting a Cell Phone Policy?

In this fast-paced, high-tech world employees routinely use cell phones while they drive. Increasingly, when employees are involved in accidents while using cell phones, their employers are being sued for their employees' alleged negligent operation of their vehicles. After all, employers usually have the "deeper pocket." This Legal Update focuses on some of the risks facing employers when their employees use cell phones while driving, as well as some steps employers can take to minimize those risks.

Background

An employer may be held responsible when one of its employees, acting within the scope of his or her employment, causes damage or injury to someone else. For example, suppose Joe, a delivery employee for XYZ Company, were to drive unsafely while making a delivery on behalf of the Company and cause an accident in which a pedestrian is injured. The Company may be held "vicariously liable" for Joe's negligence. Some recent cases provide expensive examples of how victims have used the theory of vicarious liability to seek recovery against employers whose employees have been involved in car accidents while using cell phones "on the job":

• A Smith Barney broker was allegedly conducting business on his cell phone while he was driving. The broker's car hit and killed a motorcyclist. Although there were issues as to whether the broker was, in fact, acting within the scope of his employment at the time of the accident, Smith Barney reportedly settled the case for $500,000.
• A public school teacher from Hawaii was chatting on her cell phone while driving when her vehicle struck a man who was walking across a highway. The State of Hawaii paid $1.5 million to the victim.
• A salesman of a lumber wholesaler was talking on his cell phone when his car hit an elderly woman. The jury awarded $21 million to the woman. The case was subsequently settled for $16.2 million, which represented the limit of the insurance policies of the salesman and his employer, Dyke Industries.
• An associate at a law firm made numerous cell phone calls on a daily basis and billed clients for the calls. Late one evening, while the associate was driving and talking on her cell phone, she struck a 15-year old girl. The victim's parents sued the associate and her law firm, seeking $30 million in damages. Whether the associate was making a business or personal call at the time of the accident is in dispute, so it is not clear whether the associate was acting within the scope of her employment. Unless the case is settled, it is headed for what could be an expensive trial.

Of course, in a lawsuit, it is fairly easy to verify whether an employee was using his or her cell phone at the time of an accident. Cell phone records will answer that question. In litigation, the records are obtainable either from the cell phone user or by subpoena from the cell phone service provider.

Protecting Yourself

Employers can minimize the risk of cell phone-related accidents and potential liability by maintaining liability insurance, following local laws regarding cell phone use, training employees in safe driving practices, and, perhaps most important, adopting and publicizing policies regarding the use of cell phones. Indeed, a well-crafted and consistently and rigorously-enforced policy may provide an employer with a viable defense even if an employee deviates from it.

Liability Insurance

Does your organization have a general liability insurance policy? If not, it should seriously consider purchasing one to protect against the inevitable accident. If your organization already has liability insurance, check the policy to see if there are any terms regarding cell phone usage. Keep in mind that more than 30 states are currently considering legislation banning the use of cell phones while driving, and the State of New York has already adopted one. A policy may exclude coverage for accidents caused by illegal activity. If so, your insurer may deny coverage in the event that an employee violates state law by using a cell phone at the time of the accident.

Training

If your employees often drive while conducting work, are they expected to stay in touch with the office, clients, or customers while on the road? If so, it is critical to take the time to train them about safe driving practices. Don't assume that employees are aware of the dangers associated with cell phone use or the consequences that could befall them, your organization, or innocent bystanders.

Policy Elements

In crafting a policy, you must make a number of decisions. Will you have a blanket ban on using cell phones when employees drive? If so, is that a realistic approach, given your organization's culture and expectations? Or, will people use cell phones no matter what the policy states? If an outright ban is not realistic, then you need to have rational guidelines in the policy. Some employers require employees to pull off the road or over to the side of the road before using a cell phone while in a vehicle. Others permit hands-free use of a cell phone while driving. Studies, however, show that cell phones are a factor in more and more traffic fatalities every year and that so-called "hands free" devices do little to minimize the risk of accidents. Still other employers have policies that go beyond cell phones. Their policies prohibit employees from having any distractions when they drive, whether they are PDA's, consuming food, or other things that may undermine concentration.

Some employers include cell phone policies in their employee handbooks. Others have separate policies and require employees to sign an acknowledgment and receipt confirming that they have received and read the policy, they understand it, and they will abide by it. Many employers who provide employees with cell phones or who reimburse employees for use of their cell phones also require employees to confirm in writing on a periodic basis that they have fully complied with the policy. Still other employers that provide employees with cell phones place a sticker on them reminding employees of the cell phone policy. A few employers require employees to sign agreements that they will indemnify their employers if they violate the cell phone policy.

Make It Stick

While it is important to adopt a policy, it is also imperative to enforce it. Failure to do so can be as bad, if not worse, than having no policy at all. Moreover, it is essential to enforce the policy consistently. Employees who violate it should be held accountable, usually through a combination of education and discipline. Even the best policy won't amount to much if no one follows it!

Funkhouser Vegosen Liebman & Dunn Ltd. publishes updates on legal issues and summaries of legal topics for its clients and friends. They are merely informational and do not constitute legal advice. We welcome comments or questions. If we can be of assistance or help you craft a policy, please call or write: Jon Vegosen, 312.701.6860, , Dara Sahebjami, 312.701.6885, , or your regular FVLD contact.

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