Employer liability in a wireless world - Employee Liability

California CPA, May, 2003 by Patricia T. Stambelos

The use of cell phones, Palm pilots and other persona! electronic devices has become a significant part of our everyday lives. These devices have proven particularly important to businesses, such as accounting firms, where clients often insist on 24-hour service.

Unfortunately, the benefits of such technological advances come with a price. According to a 1997 study in the New England Journal of Medicine, drivers are four times more likely to have car accidents while using cell phones. The study also found that the risk was the same when drivers used "hands-free" devices.

THE WAVE OF LAWSUITS

Imagine that your employee is talking to a client via cell phone on his way home from the office and hits what he mistakenly thinks is an animal--but is a 15-year-old girl--and keeps driving. The girl dies. Cell phone records show that he was talking at the time of the accident, and time records reflect that he was billing a client for the time he was talking. The employee is charged with felony hit and run.

This occurred in Virginia and the family of the girl brought a $30 million wrongful death suit against the employer. The suit is still pending.

In a suit against lumber wholesaler Dykes Industries in December 2001, a Miami jury awarded $21 million to a woman who was severely injured by one of the company's salesmen involved in an accident while he was talking on his cell phone.

In Pennsylvania, a Smith Barney stockbroker--who was talking on his cell phone on the way to a non-business dinner--hit and killed a 24-year-old motorcyclist. Testimony revealed that the firm expected its employees to make "cold calls" on personal time. The plaintiff alleged that the firm was negligent because it encouraged employees to use cell phones without providing training on the potential hazards and risks.

Smith Barney settled with the victim's family for $500,000.

And in an action involving a state employee who was allegedly talking on her cell phone when she hit a tourist, causing permanent brain damage, the state was found partially liable and paid $2.5 million.

THEORIES OF EMPLOYER LIABILITY

Plaintiffs have been suing employers under these theories of liability:

1. The employer requires or encourages employees to be available to clients at all times and either provides cell phones or reimburses employees for use of their personal items; or

2. The employer knows that employees are using phones while driving and fails to ensure that they are doing so safely.

And these theories apply to the use of any device that creates a distraction--cell phones, pagers, etc. Further, employers could be liable whether or not the call is business related and they are also exposed to the risk of suits by employees under workers' compensation and other theories.

WHAT IS AN EMPLOYER TO DO?

Employers are well-advised to implement a policy prohibiting the use of attention-distracting devices, such as cell phones, while driving. In the event of a lawsuit, such a policy will enable an employer to argue that employees, even if they were conducting company business at the time of the accident, were acting outside the scope of their authority. Employers that implement such a policy, however, must enforce it by disciplining employees for violations.

At a minimum, employers should implement a policy that emphasizes safety and includes the following requirements:

* Employees familiarize themselves with any applicable state or federal laws governing the use of such devices while driving;

* Employees place the device within easy reach and understand and utilize its features, including voice recognition, speed dial and redial;

* Limit cell phone use while driving to hands-free operation, prohibit taking notes while driving and encourage the use of voicemail until the employee is safely off the road and parked;

* Prohibit employees from engaging in stressful or emotional conversations while driving; and

* Prohibit the use of such devices in adverse weather or traffic conditions.

Such a policy might not stop a lawsuit, but it will certainly give an employer some legitimate and credible defenses should a lawsuit arise.

As always, given that employment policies must comply with all applicable laws, employers should first consult legal counsel regarding state and local regulations and ordinances limiting the use of cell phones and other devices while driving.

Patricia T. Stambelos, Esq. is a special counsel at Ford & Harrison in Los Angeles. You can reach her at pstambelos@fordharrison.com.