Employers beware There's a new kind of cell phone fee

September 28, 2009
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Technology. Efficiency. Productivity. Three words that drive many business mantras in today's competitive global market.

They’re also three words that drive many employees to use cellular phones while driving.

In their pursuit to be technologically savvy, efficient and productive, employers may encourage — or at least passively allow — employees to expose them to an increased risk of legal liability arising from cell phone-related accidents.

The vicarious liability doctrine of "respondeat superior" enables a court to impose liability on an employer for the wrongful acts of its employee, if the employee commits the wrongful act while performing a duty within the scope of employment. Recent personal injury lawsuits demonstrate the courts' willingness to include the act of using a cell phone while driving as being within the scope of employment.

A Florida jury ordered Dykes Industries of Little Rock, Ark., to pay nearly $21 million to a woman injured in 2001 when one of Dykes' salesmen struck her vehicle while using a cell phone and traveling between appointments. The parties settled for $16.1 million.

In 2007, International Paper Co. agreed to pay $5.2 million to settle a personal injury lawsuit related in part to an employee's use of a cell phone while driving.

To date, Michigan courts have not been presented with this type of personal injury lawsuit. However, the Michigan Supreme Court's 2002 opinion in Rogers v. J.B. Hunt Transport Inc. lays out the Court's rationale for finding employers vicariously liable for acts of employees within the scope of employment.

The Court stated that the basis of vicarious liability is not merely that an employer typically has a greater ability to pay than an employee. In addition, the imposition of vicarious liability provides 1) an incentive for employers to attempt to reduce tortious conduct by their employees, and 2) the fair distribution of risk associated with activity that is characteristic of a business.

The risks associated with cellular phone use while driving can no longer be ignored. A 2008 research report by the AAA Foundation for Traffic Safety stated that studies using driving simulators have found that using a cell phone while driving significantly impairs several aspects of driving performance, causing drivers to commit the same types of errors that can occur under the influence of alcohol. The AAA report notes that studies of the cell phone records of crash-involved drivers suggest that using a cell phone while driving is associated with roughly a quadrupling of crash risk.

Furthermore, a March 2008 study by Carnegie Mellon University concluded that drivers need not dial, hold, or even talk into a cell phone to be distracted. Simply listening to a cell phone while driving produces a 37 percent decrease in the brain activity associated with driving. Such research findings have prompted many safety organizations to support a "no-use" policy when it comes to cell phones and driving.

No state has completely banned all types of cell phone use for all drivers, but many prohibit cell phone use by segments of the population such as bus drivers and novice drivers. Only five states have passed handheld cell phone bans for all drivers, and 14 states have banned text messaging for all drivers.

In Michigan, Detroit is the only city to ban drivers from using handheld cell phones.

The Michigan legislature has proposed four bills in 2009 that amend section 320a of the Michigan Vehicle Code to include bans on handheld cell phones and text messaging while driving.

Obviously, now is the time for employers to take steps to protect themselves from such cell phone-related liability. How can employers do this? The Louisiana Court of Appeals' decision in Ellender v. Neff Rental Inc.. provides insight into how a Michigan court may assess employer liability.

In Ellender, a motorist brought a negligence action against Neff Rental asserting that a company sales manager injured him in a car accident caused by the sales manager's distracted driving while using a cell phone. The court noted that 1) Neff Rental provided the sales manager with a company cell phone, 2) the sales manager regularly conducted business via cell phone while driving, and 3) though Neff Rental never expressly authorized cell phone use while driving, the company did not have policies or procedures forbidding it.

The court decided that the sales manager was acting within the scope of his employment at the time of the accident. Neff Rental was thus held vicariously liable for the injuries.

Accordingly, it is suggested that employers place a cell phone use policy in their employee handbooks. Such a policy could, for example, mandate that employees stop or pull off the road before making or receiving cell phone calls.

Employers should educate employees about the risks associated with cell phone use while driving, via such mediums as safe driving workshops. They can also require employees to use only hands-free phones. Finally, employers should provide documentation that employees receiving company cell phones or reimbursement for personal cell phone use have agreed to obey company policy.

Overall, today's business environment requires employers to encourage employees to leverage technology to be more efficient workers. Employers must make sure to factor in all of the relevant risks associated with productivity initiatives, before "hidden cell phone fees" crash the bottom line.

Jaclyn Podor, who attends law school at the University of Michigan, is a summer associate at the law firm of Varnum LLP.

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