Are You Geared Up to Be Liable For Millions of Dollars in Penalties?

Studies show that companies face increasing risk from employees cell phone use while driving. Hand free use is just as dangerous.

December 21 2009 by Len Crawford


Does any CEO know what his or his company’s obligations will be in case an employee of his company badly injures an individual in a road accident while talking company business on his mobile phone? Legal experts believe the repercussions of such a situation could mean millions of dollars in penalties and lawsuit settlements.

Scores of research studies indicate there are innumerable instances of incidents where the companies have been held liable for road accidents by employees who were talking business while driving their vehicles. Companies such as International Paper, Reynolds & Reynolds have paid millions of dollars in accident settlements on behalf of their employees. International Paper settled a similar dispute by paying $5.2 Million to a Georgia woman victim. An Arkansas company also paid $16 Million to a woman injured in road accident.

Reynolds & Reynolds, a Dayton, Ohio software company had to shell out $21.6 million to the victim in a lawsuit settlement. According to a report in The Voice Report, a telecom information service based in Gaithersburg, MD, the company had to pay since the employee’s spouse was using the company vehicle and was responsible for the accident while she was busy on her cell phone.

Ironically, many company executives have no clue about the great financial risk their company faces in case their employees’ use of cell phones or any other electronic device while driving results in accidents.

Martha Buyer, an attorney specializing in telecommunications law, feels most of these accident trials have gone in favor of the victims and the companies’ in question have ended up paying huge penalties.

According to a study from the Harvard Center for Risk Analysis, out of the 636,000 traffic accidents each year, 6 percent account for accidents due to cell phone usage while driving, which means an estimated 2,600 deaths every year because of negligent driving. A University of Utah study considered driving while using cell phone was equivalent to drunk driving.

Additionally, while a Virginia Tech Transportation Institute research indicated that cell phone texting increased collision risk by 23 times, a New England Journal of Medicine report found that individuals were four times more prone to accidents in case they use cell phones while driving.

While these studies indicate using cell phones while driving significantly increases the likelihood of an accident, the companies are also facing an increased risk of large financial losses in the form of huge settlements and extensive legal expenses.

Realizing the risks involved some large companies have already restricted the use of cell phones while driving. According to a 2005 Atlanta Journal-Constitution article, few companies have already come up with employee cell phone usage policies which squarely prohibit the use of cell phones while driving. Companies such as Exxon Mobil and UPS have banned employees from using cell phones while driving.

“Before Exxon enacted its hang-up-and-drive policy, the oil giant assigned its own scientists to evaluate the matter. Among the nine studies they cited in recommending the ban, one found that the response time for applying brakes for people indulging in cell phone driving was found to be three times longer than that for drunken drivers,” the Atlanta Journal article noted.

Interestingly, companies such as Shell Oil have issued whips urging not just employees but also outside attorneys working for them not to indulge in cell phone driving. A Houston Chronicle reporter’s blog stated that Shell Oil Co general counsel has requested outside attorneys not to use cell phones while they are driving.

What Do Experts Recommend to Lower Risk?

Experts believe companies should have a well crafted employee policy that prohibits cell phone usage while driving to mitigate the risks involved. The policy should have inputs on short conversations; inputs on whether to allow hands free usage, or permit speed dialing commands on cell phones while driving.

Katherine McArthur, the plaintiff’s attorney in the International Paper $5.2 million settlement argued:  “Why would a company allow or even approve of its employee doing something that they either knew or should have known is as bad or carries with it as many injuries and fatalities as drunk driving? And the answer is ‘profit.’    In terms of employers’ liability Katherine also noted that unless companies have a clear cut policy which prohibits the employees from using cell phones while driving, they cannot escape the financial brunt in the form of penalties by courts of law.

Hand- Free Usage Just as Dangerous

Research studies point out that hands-free usage could be as dangerous as the hand held usage.

An LA Times article rightly stated: “The biggest danger is ‘cognitive capture’ – or being blind to driving cues because one is absorbed in conversations, especially emotional ones”. Think trying to close a deal, resolve an important corporate problem, and discussing firing an employee. Additionally, the article pointed out quoting Arthur Goodwin, a researcher at the University of North Carolina Highway Safety Research Center “there’s a common misperception that hands-free phones are safer when the research clearly suggests that they’re both equally risky.”  

IN an accident of this sort, not only does a company face a potential risk of large monetary liabilities, it could as well lose a key employee to a major injury or death.  Besides, the organization could be exposed to huge negative publicity. 

Newspaper reports prior to fixing insurance premiums, insurance executives are probing if a particular company has a cell phone usage policy or not. A recent NY Times report indicated that many companies have not yet evaluated the risks associated with employees using cellphones while driving as it is still considered to be something accepted and part of our lives. 

Suggestions on Implementing a Cellphone Policy

If a company decides to implement a policy to ban or limit cellphone usage, the policy needs to be a point of emphasis. A strict policy on paper with a wink and a nod from management will provide little help in a lawsuit, and may make things worse.

A company needs to have a full fledged cell phone policy defining all the aspects clearly. It should specifically mention what employees can or cannot do. 

Firstly, the companies need to ensure if its cell phone policy is in accordance with the state law and the other areas of its operations. Several states have already banned handheld cell phones while driving. 

Additionally, the company policy should also address issues related not just with cell phones but all the electronic devices such as PDAs, computers/laptops, navigational devices, company data devices, and iPods that can cause a major distraction while driving.

Likewise the policy should also address the usage of an employee‘s personal cellphone while driving and discussing company business. The policy should also have provisions to limit the usage of the company vehicles by the employees. In case spouses or other relatives use company vehicles then the policy should also reflect the same in its documents.

The cell phone policy should clearly define consequences for employees violating the rules. All employees should sign the policy testifying that each of them have clearly read and understood the policy.  
 
The companies should also educate employees on hazards of cell phone driving which can put their own lives to risk, besides putting the company to great financial loss. This endeavor will result in strict adherence to policy guidelines by the employees. 

As a measure of creating awareness, cell phone policy should be a part of the new employee training programs. It should also be reinforced in the periodic employee newsletters, posters in the cafeteria, or other such places where employees assemble for a break.

Some companies even place stickers emphasizing the critical prohibitions on the usage of cell phones and other electronic devices.  The National Safety Council has a free downloadable Cell Phone Policy Kit that hosts a sample cell phone policy that can be adapted to your company’s requirements, besides samples of posters, power point presentations and employee training material.
   
Lastly the companies should religiously implement the policy. There are tools to check and prevent cell phone usage while driving. Companies can employ such tools and gadgets since the temptation to answer a call, respond to a text message, or make a call is known to be irresistible for most of us. 

If a company is yet to address this issue, it is time for it to act lest leniency could result in great risk for the company. If you don’t have a policy, don’t wait till one of your employees is held guilty of an accident for cell phone driving. Now is the time to develop and implement one.


Len Crawford is president of Rainbow Information Systems (www.rainbowinfosys.com),  a telecommunication expense reduction and consulting firm.