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Advances in Technology Increase Employer Liability (Cell Phone Use)

January 01, 2000-By F.R. "Fritz" Damm and Jack VanHoorelbeke

In 1985, two years after wireless telephone technology emerged on the market, only 345,000 people in the United States owned wireless telephones. Today, more than 60 million people in the United States subscribe to wireless telephone services. It is estimated that by the year 2000, 80 million people in the United States will own wireless telephones.

Of those who currently own wireless telephones, 85% use their phones while driving. Cellular phone use offers drivers several benefits, including the ability to conduct business while on the road; the ability to stay in touch with loved ones while away from home or at work; and the ability to call for assistance, report emergencies, convey information about hazardous conditions, and report reckless or drunk drivers from the road. To further illuminate the advantages enjoyed by drivers due to the advent of cellular phones, both the New England Journal of Medicine and National Highway Traffic Safety Administration (NHTSA) studies found that cellular phone use often reduces the response time to automobile accidents and actually saves lives.

In addition to the myriad of benefits associated with cellular phones, they also have been found to present severe drawbacks. The first major study to examine the dangers associated with cellular phones was conducted in 1994 by a group of Canadian scientists from the University of Toronto. Their study of 742 selected drivers revealed that those using cellular phones while driving were four times more likely to have an accident than those not using their phones. According to the researchers, this quadrupled risk of collision during the brief period of the call is equivalent to the risk caused by legal intoxication. Moreover, the risk remained the same regardless of whether the cellular phone was "hands-free" or "hand-held." This finding may indicate that the main hindrance causing cell phone related car accidents is a limitation on the driver's attention, not a limitation on the driver's dexterity. Notwithstanding the researchers' findings, they never recommended a ban on the use of phones while driving. Rather than emphasizing the need for regulatory measures, they focused on the need for individual responsibility and care.

Employer Liability

One of the major drawbacks associated with cellular phone use is potential employer liability. Employers may now face liability for injuries or damage caused by employees who use cellular phones while driving on company business. Employers who demand that employees work anytime, anywhere, including while traveling in their cars, may be subject to tremendous liability. An analogous situation arose early in the 1990s when Domino's Pizza faced liability as a result of its "30 minute delivery or free" policy. During this time Domino's Pizza delivery drivers were required to deliver pizzas within 30 minutes or face the likelihood that they would have to pay for any pizzas if they were not on time. As a result of this policy, delivery drivers were involved in numerous automobile accidents. After many jury verdicts in favor of the injured parties, Domino's changed its policy. Now, with the advances in technology and low operating costs, almost everyone owns and uses cellular phones. As such, employees can be more productive since they are able to engage in company business practically anytime, anywhere. Also, employers are able to provide employees with cellular phones with practically no expense. With the benefits, however, comes the likelihood that an employer may be exposed to liability when employees, engaged in company business, are involved in accidents while using their cellular phones.

Recently, Smith Barney was sued by the family of a man who was killed in an automobile accident when their employee became distracted while using his cellular phone for a job related matter. Plaintiffs accused Smith Barney of having a policy encouraging its employees to do business in their cars anytime of the day and that the employee in this case was attempting to contact a client at the time of the accident. Given the facts of the case, Smith Barney believed that it could have defeated a "scope of employment" claim. Smith Barney claims that it did not provide cellular phones to its employees, did not require its employees to use cellular phones for business purposes and that in this particular case the employee was not acting within the scope of his employment at the time of the accident. Nonetheless, Smith Barney agreed to settle the case and pay the Plaintiffs $500,000. Smith Barney's willingness to settle was based on the concern that a jury would be overly sympathetic for the victim's fiancee and two children. Despite the settlement, this case could have a substantial impact on employers with employees that use cellular phones for business purposes.

Legislative Action

In an attempt to reduce automobile accidents, many countries have enacted laws banning the use of cellular phones while driving. Countries such as England, Switzerland, Spain, Australia, Israel, Italy, Brazil and the Republic of Singapore currently restrict or prohibit the use of cellular phones while driving. Specifically, police can charge an English driver with not being in proper control of a motor vehicle, an offense which carries a maximum fine of ú2,500. English drivers can also face more serious charges, including unlimited fines and up to two years imprisonment, if using the phone causes them to drive recklessly or carelessly.

In the United States, the federal government has not enacted any statute or mandate governing cellular phone use. However, many states have enacted or are considering legislation prohibiting or restricting cellular phone use while driving. Although no state has banned the use of cellular phones, California, Florida and Massachusetts currently impose minor restrictions on cellular phone use. At least 18 other states have proposed legislation similar to the legislation enacted in California, Florida and Massachusetts. However, on the local level, a Cleveland, Ohio suburb passed an ordinance prohibiting the use of cellular phones while driving. Drivers caught while using cellular phones in this suburb are subject to a penalty of $100, plus $45 in court costs. This is currently the only ordinance of its type, but it is possible that many localities may follow suit and adopt their own ordinances.

Regardless of whether any laws or regulations are enacted concerning the use of cellular phone use, employers who require or otherwise permit employees to conduct company business while driving their automobiles could be subject to tremendous liability. If an employee is acting within the scope of his or her employment when involved in an automobile accident, the employer will likely be liable for any injury or damage caused by the employee. Therefore, employers should be sure to establish very clear policies regarding the work performed outside the office so as to avoid any potential liability.