Employers seeking to increase productivity by arming their employees with cell phones and PDAs (personal digital assistant) not only have a new statute to comply with -- the California Wireless Telephone Automobile Safety Act of 2006 -- which becomes effective on July 1, 2008, but also face: (1) increased risks of liability from third-party personal injury claims; (2) possible claims for unpaid compensable time; and (3) additional work related injuries.
1. The California Wireless Telephone Automobile Safety Act of 2006
According to a 2005 study commissioned by the Insurance Institute for Highway Safety ("IIHS Study"), drivers who use cell phones, even hands-free models, are 400 times more likely to be involved in serious accidents. Not surprisingly, California passed legislation prohibiting drivers’ use of hand-held cell phones. The California Wireless Telephone Automobile Safety Act of 2006, codified as Vehicle Code Section 23123, takes effect in July 2008 and will make it an infraction to drive a motor vehicle while using a cell phone, unless the phone is configured to allow hands-free listening/talking and is used in that manner. Violators will pay a fine of $20 for the first offense and $50 for subsequent offenses. Exceptions to Section 23123 include, among others, emergency calls and push-to-talk hand-held phones that drivers of certain commercial vehicles may continue to use until July 2011. Interestingly, the IIHS Study found that cell phones with hands-free operation offered little or no appreciable safety advantage over hand-held operation – suggesting that laws allowing drivers to use hands-free devices will not materially curb the accident risks associated with cell phone use.
A. High Risk Stakes
To minimize exposure to liability, employers need to ensure their employees comply with Section 23123 before it takes effect in July. Several large corporations have reportedly gone beyond the statutory requirements by completely prohibiting cell phone and PDA use while their employees are driving. This move is ostensibly the result of several high dollar settlements that serve as warnings to employers seeking to maximize productivity through cell phones and PDAs. Some examples: A prominent national law firm reportedly faced a $30 million dollar wrongful death lawsuit when one of its attorneys, while allegedly engaged in a business call, hit and killed a pedestrian; an international investment bank reportedly paid $500,000 to the family of a motorcyclist who was struck and killed when one of its employees allegedly ran a red light while participating in a work-related cell phone call; and a state government reportedly agreed to pay $1.5 million to a pedestrian hit and injured by a state employee driving and allegedly wrapping up a work-related cell phone call.
Employer liability in such third-party cases is generally based on the doctrine of respondeat superior – under which an employer may be vicariously liable for the harm caused by its employee if that employee is acting within the course and scope of his or her employment at the time the accident occurred. In simple terms, the ability to conduct business calls and respond to e-mails while driving has blurred the distinction between a personal commute and a business activity. In addition, direct and vicarious liability are not mutually exclusive. Plaintiffs often claim that an employer is also directly negligent for its own conduct of encouraging and permitting employees to use cell phones and other wireless devices for business purposes without adequate training or adequate consideration of safety issues. Furthermore, the employees may seek indemnification from the employer – under the Labor and Government Codes – for losses incurred "in discharge of their [work-related] duties."
B. Best Practices
Though preventing such claims is impossible, employers can take affirmative steps to lessen their potential liability by developing and enforcing a comprehensive cell phone and PDA policy. The following are suggestions employers should consider incorporating into their policy:
1. Conducting mandatory employee training regarding the legal and safety risks associated with using cell phones and PDAs while operating motor vehicles.
2. Prohibiting cell phone or PDA use -- for business and personal communications -- while operating any company vehicle or personal car for company business and for all employer communications, even while the employee is "off the clock." The policy should be in writing, with a signed acknowledgement from employees that they have received and read it.
3. If an employee needs to make or receive a business phone call while driving, the employee should ensure the vehicle is stopped and parked in a proper parking area before using the phone.
4. If an employer determines that a complete prohibition on cell phone and PDA use while driving is impractical – for instance, if making or receiving phone calls while driving is a business necessity – the employer may allow the use of hands-free cell phones that comply with Section 23123. However, employees who use hands-free cell phones should keep business conversations brief while driving, and should stop the vehicle in a proper parking area if the conversation becomes involved, if weather or the road conditions are poor, or if traffic is heavy.
5. Restricting use of cell phones and/or PDAs to emergency situations while driving where "life and limb" are at stake.
In addition, when evaluating their cell phone policy, employers may wish to re-examine their insurance coverage. Typically the risk involved is covered by "non-owned automobile" liability insurance when the liability arises from an employee using his or her own car for business purposes. Some employers who do not have company cars have neglected to purchase such insurance and have faced significant uninsured losses. Umbrella policies typically provide added policy limits for the risk beyond the basic and often fairly low limits of automobile liability coverage. Employers may wish to check with their brokers and insurers to determine whether their coverage for automobile risks is appropriate for their businesses.
2. Blackberry Thumb
In addition to third party tort claims, employers may also face workers’ compensation claims for health problems allegedly associated with PDA use. To help avoid claims for so-called "Blackberry-thumb," – a catchall phrase that describes a repetitive stress injury of the thumb – employees should be cautioned to use PDAs sparingly and refrain from drafting long e-mails on these devices. Cell phone and PDA policies should also encourage employees to report any injuries associated with use of these devices.
3. Potential Wage Claims
Other issues presented by PDA use are potential claims under California and federal law for failing to pay non-exempt employees all of their earned wages and applicable overtime. These issues can arise where employees are forced or allowed to work "off-the-clock" and are not compensated for unrecorded time. While neither the Division of Labor Standards Enforcement ("DLSE") nor the Department of Labor ("DOL") have addressed this specific issue relative to PDA use, it appears likely that time spent by non-exempt employees actually responding to business e-mails on these devices will be compensable. In an arguably analogous situation, the DLSE noted that if an employee is required to wear a pager and is called upon to respond to a page during a meal or rest break, the entire break-period would be compensable – even if the response-time is de minimis. Although one might argue that carrying a cell phone or PDA does not necessarily mean that an employee is on call, the situation is far from clear and, at a minimum, actual after-hours cell phone and PDA use will be treated as time worked.
There is no bright-line rule to determine when on-call-time is compensable or non-compensable and both the federal and California tests are fact-intensive. The bottom-line consideration is the amount of "control" exercised by the employer over the activities of the employee.
A. Best Practices
In the absence of a definitive answer on this issue, the following are suggestions to lessen potential liability for such claims:
1. The most obvious approach is to issue PDAs only to those non-exempt employees who truly need to be available. Employers should also consider issuing PDAs only for a specific project on an as-needed basis.
2. Cell phone and PDA policies should prohibit all non-exempt employees from working on PDAs "off-the-clock." To the extent such PDA use is required, employers will need to develop a specific and efficient system for non-exempt employees to report off-hour PDA use. A written policy prohibiting employees’ use of PDA for personal calls and e-mails will also help to avoid complications in effectively tracking work-time spent on the PDA.
3. Employers who pay their non-exempt employees a reduced compensation rate for travel should be aware that if the employee works while traveling – for instance responding to emails on a PDA – the employee is entitled to their normal rate for the time worked and, possibly for the entire travel time.
4. Employers should also conduct training programs for supervisors that explain the prohibition of "off-the-clock" work by non-exempt employees, and make clear that supervisors will be disciplined for either suggesting or allowing such work to proceed without being properly recorded.
Cell phones and PDAs provide an unquestionable benefit to employers by helping to maximize employee productivity. That benefit is not without risks. Although developing and enforcing a comprehensive cell phone and PDA policy does not immunize employers from personal injury and wage claims, such policies can assist employers in managing the risks and lessen potential liability. Employers may want to consult their employment counsel before drafting comprehensive cell phone and PDA policies.
Veronica M. Gray is Chair of Nossaman’s Employment Practice Group and represents employers in all areas of employment law. She can be reached at (949) 477-7663 or firstname.lastname@example.org.