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Posted on December 30, 2008June 27, 2018

Massachusetts Ups Penalties for Lack of Health Coverage

Massachusetts residents who are not covered under a health insurance plan in 2009 face higher financial penalties under newly proposed rules.


The maximum penalty next year for those with incomes exceeding 300 percent of the federal poverty level will be $89 for each month an individual does not have coverage, or $1,068 for a full year of noncompliance, according to the guidelines proposed by the Massachusetts Department of Revenue.


In 2008, the penalty for noncompliance was $76 a month, up to a maximum of $912 a year. Penalties for those with income of up to 300 percent of the federal poverty level would remain the same as in 2008. Penalties, though, do not apply for whose income is less than 150 percent of the federal poverty level, as such individuals are eligible for free health insurance coverage with premiums completely subsidized by the state.


In addition, individuals can obtain an exemption from the penalty if they can prove that affordable health insurance coverage is not available. In 2007, though, only 1.9 percent of tax filers—roughly 76,000 adults—were uninsured and deemed by state regulators as unable to afford health insurance and exempt from the penalty, which then was only $219.


Imposing penalties on those without health insurance is a key part of the 2006 Massachusetts health care reform law, which seeks to move the state very close to universal coverage. An earlier state report found that objective has been met, with more than 97 percent of state residents now insured.


Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.


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Posted on December 30, 2008June 27, 2018

Top Workforce Management Stories of 2008

Know what gets readers worked up? Answer: anything that might mess with their 401(k). “House Democrats Contemplate Abolishing 401(k) Tax Breaks,” from October 16, was the No. 1 most-read story in 2008 on Workforce.com. Check out this list of the Top 10 most-viewed stories on our site, based on what readers clicked on during the past year.

Posted on December 29, 2008June 27, 2018

Employers in China Have Issues Shedding Workers

Companies that rushed into China during the boom years may find it difficult amid the global downturn to extract themselves, labor law attorneys say.


“It wasn’t too long ago when the burning issue was hiring, recruiting and retention,” said Joseph Deng, a labor contract attorney with Baker & McKenzie in China. “Now it seems the No. 1 issue for many companies in China is cost cutting, termination and redundancies.”


Landmark labor laws enacted in China this year have strengthened protections for workers, including wage standards and Social Security benefits. But worker protections against employers looking to downsize their workforce may be among the most stringent, China law experts say.


Chinese labor law prohibits “at will” firing practices common in the U.S., which means employers must have a legal basis for firing any employee.


“The first thing you have to keep in mind is that employees have contracts,” Deng said. “You cannot unilaterally terminate a contract.”


Before making any layoffs, employers need to present their plans to employee-represented work councils at each company—called employee representative congresses, which are union organizations elected by employees. For employers whose workers have not organized into unions, any indication that the company intends to lay employees off could incite workers to organize.


Deng recommends that employers file a report of a strategic plan with local labor bureaus.


“They don’t approve a plan, but they play an important role in providing guidance,” he said.


Firing workers remains something of a taboo in China, as it is in much of Asia. Employers should present layoffs as part of a strategic plan rather than a cost-cutting measure, said Baker & McKenzie attorney Guenther Heckelmann, otherwise employers open themselves up to challenges from workers regarding how companies calculate their costs.


Employers are unlikely to be able to lay off groups of workers using criteria usually reserved for firing individuals, like showing a worker is incompetent or has behaved improperly. Employers must show a change in the company’s circumstances. For example, a company’s decision to idle a plant could qualify. Employers must then attempt to find new work for the employee before giving that person 30 days’ notice of his termination.


Dan Harris, a Seattle lawyer with the firm Harris & Moure, wrote in his China Law Blog that restrictions against at-will terminations may be the most stringently enforced requirements in China’s new labor law, which took effect January 1, 2008, and was preceded by a backlash among workers to worsening working conditions in China.


Harris wrote of a client who was told by a Chinese government official in Shangdong, a coastal province southeast of Beijing, that “so long as this company did not lay off any of its approximately 250 Chinese employees, the government would look the other way regarding other labor law violations.”


The popularity of the new law has tripled the number of disputes brought by workers against their employers, said Andreas Lauffs, the Hong Kong-based head of the employment law group at Baker & McKenzie.


“There’s not a single worker that doesn’t know this law inside out,” Lauffs said.


Earlier this year, a large multinational corporation represented by Baker & McKenzie negotiated severance packages with employee-established labor unions as a precondition for laying off the workers, Lauffs said.


All unions in China are organized under the nationalized All-China Federation of Trade Unions. While striking is illegal in China, workers have been known to engage in work stoppages and slowdowns. China legal experts are watching to see whether the economic slowdown will loosen the new contract laws in China.


The Chinese economy has been growing at around 12 percent a year. Officials have worried that a lower growth rate of 8 percent is the minimum needed to forestall public unrest. For now, though, the new labor laws remain intact.


“For multinationals, if they want to downsize as a result of the current economy, they’ll have to tread very, very cautiously,” Lauffs said. “China is no longer the place where you can go and set up shop with cheap labor and no labor laws.”


—Jeremy Smerd


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Posted on December 24, 2008June 27, 2018

Three Defined-Contribution Rules Face Ticking Clock

Three key defined-contribution proposed regulations could be in jeopardy because the Department of Labor failed to win White House approval far enough ahead of the change in presidential administrations, pension industry lobbyists and attorneys said.

One regulation would set ground rules for providing investment advice to participants in DC plans. A second would detail the fee information that the plans are supposed to provide to plan participants, while the third would spell out the fee and compensation information that service providers have to provide to DC plan sponsors.

All three measures have been staunchly promoted by Bradford P. Campbell, assistant secretary of labor and head of the Employee Benefits Security Administration. Campbell had hoped to make the rules final before January 20, when the Obama administration will take control of the executive branch.

But none of the regulations have received final approval from the White House’s Office of Management and Budget. In a May 9 memo, Joshua B. Bolten, the president’s chief of staff, told all executive branch department and agency heads that any new regulations to be approved during the remainder of the Bush administration, “except in extraordinary circumstances,” had to be proposed by June 1, 2008, with final rules issued no later than November 1.

Lobbyists said that even if the OMB approves the regulations soon, the rules aren’t likely to become effective before the Obama administration takes over. Even if they are approved, the regulations would then be expected to be put on hold pending fresh reviews, which could result in dramatic changes.

(New federal rules usually don’t go into effect until at least 30 or 60 days after their publication in the Federal Register. In its proposals, the DOL set the effective dates for the investment advice and service provider disclosures 90 days after publication. The participant disclosure regulations were proposed to go into effect for plan years beginning on or after January 1, 2009.)

“All three rules will be scrutinized closely by a new administration as a matter of course, even if they weren’t controversial,” said Jon Breyfogle, an ERISA attorney with Groom Law Group, Washington.
Rep. George Miller, D-California, and other leading congressional Democrats have concerns with all three proposed regulations. The fee disclosure proposals have long been perceived as regulatory efforts to pre-empt further-reaching fee disclosure legislation that has been championed by Miller, who is chairman of the House Education and Labor Committee.

The DOL’s investment advice proposal also has come under fire from Miller and other leading congressional Democrats because it would dramatically open the door for mutual funds and other investment companies to offer investment advice directly to participants in defined-contribution plans.

Mutual fund companies long have been effectively barred from offering direct advice to participants because of fears that the advisors might steer participants to their companies’ own investment options.
But under the DOL’s proposal, mutual fund employees would be able to offer one-on-one advice directly, as long as the employee’s compensation doesn’t depend on the investment options selected by the participant, and the advice meets other key conditions.

The participant disclosure proposal is intended to ensure that DC plan participants are informed about investment-option fees and expenses. The service provider proposal is intended to ensure the plan sponsor has enough information to determine whether service provider fees and compensation arrangement are reasonable. Miller doesn’t believe either proposal provides sufficient information.

Of the three pending proposals, ERISA experts say the service provider one is the most likely to be approved by the OMB, because it was proposed well before the other ones and is the least controversial.

The proposals on participant disclosure and investment advice face another hurdle because they failed to meet Bush administration deadlines for publication of new regulations during the final year of the administration.

The EBSA’s investment advice rule was proposed August 22, while the participant disclosure rule was proposed July 23—and neither regulation is yet final. The service provider proposal was proposed originally by the Employee Benefits Security Administration on December 13, 2007, well ahead of the deadline.

The proposed service provider rule and the investment advice proposal were both listed as being under review on the OMB’s Web site.

“We cannot yet tell what is going to happen with final rules because we are still working on them,” Campbell said in a statement for Pensions & Investments. “With about 30 days left for OMB to process regulations in this administration, the department is hopeful our final regulations will be completed.”

Despite the missed deadlines, there’s a chance the regulations could be adopted.

“The Bolten memo set deadlines to ensure final regulations are developed in a way that preserves the integrity of the regulatory process, including adequate time for analysis, interagency consultation, public comment, and evaluation of and response to those comments,” said Abigail Tanner, an OMB spokeswoman, in an e-mail to Pensions & Investments. “The memo allows for extraordinary circumstances, which may include rules that are required by judicial decisions or statute, routine in nature, or essential operations, or occasioned by a late change in law.”

However, if the EBSA’s proposed regulations fail to win OMB approval, the dozens of comments filed in the DOL’s investment advice proceeding — and the approximately 100 comments filed in response to the agency’s participant disclosure proposal—could still prove to be helpful to Miller’s efforts to enact new DC plan fee disclosure legislation next year, pension industry lobbyists said.

“Even if the regulations aren’t issued, it doesn’t mean the whole regulatory process was in vain, because it was a tremendously educational experience that complements the legislative activity we expect next year,” said Ed Ferrigno, vice president of Washington affairs for the Profit Sharing/401(k) Council of America, Chicago.


(For more, read “A Cool Head Under Pressure.”)


Filed by Doug Halonen of Pensions & Investments, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.


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Posted on December 24, 2008June 27, 2018

Bush Signs Pension Funding Relief Measure

President George W. Bush signed into law Tuesday, December 23, a measure that relieves certain funding requirements for company pension plans.


The measure, the Worker, Retiree and Employer Recovery Act of 2008, was passed by Congress this month as part of an effort to aid employers facing large pension funding obligations due to the plunge in investment values.


The law softens funding rules that were tightened under a 2006 law that required employers to dramatically accelerate plan contributions if they missed certain funding targets.


Under the 2006 law, employers must put enough money in their plans each year so the plans will be fully funded after seven years. That 100 percent funding target is being phased in, so in 2008, plans have to fund toward a 92 percent target, while the target is 94 percent in 2009, 96 percent in 2010 and 100 percent in 2011.


If the target is missed in any year, employers then must fund toward the 100 percent target. The relief legislation removes that requirement, so that even if the funding target were missed for a year, the target for the next year would not bump up to 100 percent. For example, if an employer missed the 92 percent funding target in 2008, its funding target for 2009 still would be 94 percent.


In addition, the law suspends for 2009 requirements that retirees age 70½ or older take a minimum distribution from their defined-contribution plan.


Filed by Gavin Souter of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.


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Posted on December 23, 2008June 27, 2018

Many Automotive Suppliers Won’t Survive Production Cuts

A White House bailout of General Motors and Chrysler won’t prevent the collapse of North America’s shakiest automotive suppliers, some forecasts conclude.


Domestic and import brand automakers in North America are expected to produce 2.1 million vehicles in the first quarter, according to projections by CSM Worldwide and company forecasts. That would be a 39.2 percent drop from the same period in 2008.


And many suppliers will find it hard to survive such gruesome vehicle production cuts, predicted Neil DeKoker, CEO of the Original Equipment Suppliers Association in suburban Detroit.


“We’re going to see bankruptcies like you won’t believe” he said, “even with the rescue package.”


Idle factories
Suppliers to the Detroit Three will be in the toughest shape. Detroit Three production is expected to total 1.1 million units, a precipitous 47.2 percent decline from the same period a year earlier.


DeKoker, who has worked in the auto industry for 47 years, says he has never seen a situation so dire.


Suppliers typically must operate their factories at 80 percent of capacity or better to turn a profit, DeKoker said. Early next year, suppliers will be lucky to operate at 50 to 60 percent of capacity.


“There’s no way they can be profitable under those circumstances,” he said.


DeKoker’s association is seeking federal funds for suppliers. “We’re requesting assistance from the presidential transition team,” he said.


 Lear: At ground zero
Lear Corp. is at ground zero of the disaster. The suburban Detroit seat maker relies on the Detroit Three for nearly 46 percent of sales. Lear idles seat plants whenever a customer shuts an assembly plant.


“It’s a direct hit,” said Lear spokeswoman Andrea Puchalsky. “When they close, we close.”


The company is looking at cost savings from plant utility costs to layoffs, she said. One plus is that Lear has cash. Although it burned about $17 million in the third quarter, Lear still has $523 million.


Dave Ladd, a spokesman for trim supplier International Automotive Components Group, said the company has made no decision on layoffs, but said there “could be extended shutdowns and temporary layoffs in January.” IAC operates 34 plants in North America.


IAC is a group of interiors companies purchased by investor Wilbur Ross. Despite the consolidation, interior suppliers still are being pinched by high raw material prices and big volume cuts.


Delphi Corp. is not planning any wholesale plant closings unless a plant is 95 percent dedicated to GM, spokesman Lindsey Williams said.


North America accounts for about 45 percent of Delphi’s sales, and GM makes up 22 percent of the global total.


None of Delphi’s 14 U.S. plants is shut down, said spokesman Lindsey Williams. But he said the giant parts maker, which has been in Chapter 11 since October 2005, anticipates significantly scaled-back operations and further staffing reductions at several operations as customer volumes decline.


“We are watching customer schedules,” he said. “These are very different times for us, and we have to make adjustments very rapidly.”


Filed by David Barkholz and Robert Sherefkin of Automotive News, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.


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Posted on December 23, 2008June 27, 2018

Study Health Plans Ease Access to Essential Treatments

More health plans are reducing barriers to essential treatments in response to employers’ requests, according to the 2008 findings of the National Business Coalition on Health’s eValue8 tool, which coalition members use to assess the quality of health plans as part of the request-for-proposal process.


For example, for patients with diabetes, 27 percent of health plans waive co-payments, and 33 percent reduce co-payments, for essential drugs and equipment such as blood glucose monitors. For patients with asthma, 19 percent of health plans waive co-pays for essential drugs, and 32 percent reduce them.


For patients with hypertension, 20 percent of health plans waive co-pays for drugs and equipment, and 28 percent reduce co-pays for such treatments. In the area of wellness and health promotion, 43 percent of health plans waive co-payments for preventive health care visits.


Although employers are asking health plans to provide more detailed quality information to plan members so they can make better-educated decisions regarding provider selection and treatments, only 47 percent display such quality information, and only 16 percent enable plan members to search for physicians based on quality, the eValue8 RFP tool found.


And while employers are demanding that health plans adopt electronic medical records to improve information flow and patient safety and reduce gaps in care, so far only 25 percent of health plans indicate in their provider directories whether the physicians use electronic health records, according to eValue8.


The 2008 eValue8 findings also showed health plans need to do more to ensure plan members are receiving preventive treatment such as cancer screenings. For example, only 57 percent of health plans remind members about colorectal cancer screening, and only 53 percent of health plans tell members when their colorectal screening is overdue. Moreover, only 40 percent of the plans report to physicians if their patients have received colorectal cancer screenings.


For more information on the eValue8 tool and its findings, visit www.nbch.org.


Filed by Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.


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Posted on December 23, 2008August 3, 2023

Union Hands Out Leaflets at McDonald’s Restaurants

Union activists distributed fliers at nearly 100 McDonald’s restaurants nationwide Thursday, December 18, encouraging workers and customers to support federal legislation designed to make it easier for workers to unionize.

Members of the Service Employees International Union took the action in response to Oak Brook, Illinois-based McDonald’s Corp.’s encouraging restaurant owners to oppose the proposed Employee Free Choice Act, a union spokeswoman said.


“We want people to support the Employee Free Choice Act so workers have the right to organize without fear and harassment,” the spokeswoman said. “It remains to been seen whether McDonald’s will stop its lobbying activity against the bill.”


The bill, currently pending in Congress and supported by President-elect Barack Obama, would eliminate secret ballots in union organizing votes and allow unions to organize a workplace by obtaining the signatures of a majority of the employees on registration cards.


Business interests vigorously oppose the so-called card-check bill, which is a centerpiece of organized labor’s efforts to reverse a decades-long slide in union membership by breaking into industries like fast-food restaurants, where organizing efforts have had little success.


McDonald’s USA president Don Thompson urged 2,400 franchisees to “contact your U.S. senators and representatives to oppose” the Employee Free Choice Act in a November 25 memo. He also indicated that McDonald’s formed a “response team” to help franchisees “actively participate in the opposition to the EFCA.”


McDonald’s didn’t return calls late Thursday, but issued a statement to the union indicating the purpose of the memo was to “inform and educate our system about legislation that could impact their business,” adding that “McDonald’s is not engaged in an anti-union campaign.”


Filed by David Sterrett of Crain’s Chicago Business, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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Posted on December 22, 2008June 27, 2018

At Xerox, Learning Is a Community Activity

When Kent Purvis has a question, he doesn’t take out Xerox Corp.’s product manual and flip through the troubleshooting guide. Nor does he chase down colleagues who might (but possibly won’t) know the answers.


    Purvis, a managing principal with Xerox’s global services division, is more likely to tap the collective wisdom of peers inside a special learning and development community. Consisting of the company’s 125 managing principals, the community was set up to help like-minded employees share information and work together on business projects.

The managing principals provide secondary sales support across three interconnected lines of business: document management, business process outsourcing and office services. Their job entails broad knowledge about an array of Xerox products and business services, including software and technical support to companies that run such Xerox office equipment as copiers, printers and components. The principals also are familiar with an individual customer’s specific needs.


    As is the case with physical communities, the learning community’s strength lies in the combined assets of individual members. All participants have the opportunity to contribute to an ongoing base of knowledge, including a wiki of online resources that continues to develop.


    The give and take within the community elevates learning to a highly effective social experience for employees, Purvis says. Equally important, it provides one central location where people can go to find information that previously might have been difficult to obtain.


    “We know there is a groundswell of knowledge among our managing principals, along all the lines of business. Now there is a structure in place for sharing it” that did not exist before, Purvis says.


    Xerox is in the midst of a three-year process of selectively launching targeted learning communities for people in vital “client-facing job roles,” says Gary Vastola, the company’s vice president of learning and development.

Purvis’ group is one of about 15 learning communities launched since 2007, encompassing more than 1,000 employees. Still, that is a fraction of the 15,000-person workforce of Xerox Global Services, which is a division of Oxford, Connecticut-based Xerox Corp.

Used by employees and supported by top executives, the communities attempt to build formal structures around the many informal ways that people learn on the job. The communities also provide a clear roadway to career growth by mapping out expectations, Vastola says.

“We’re promoting the notion that people need to be continuous learners, and it’s not all about being in a classroom or taking an e-learning course,” he says.

Instead, employees learn by participation. Social networking tools are seen as the best way to disseminate information and promote collaboration across a far-flung geographic workforce, company officials say.

A prime example is a wiki, developed by and for Xerox’s managing principals. It enables them to access the most relevant and current information in one online database. In addition to fostering greater collaboration, the wiki has implications for people’s career growth, says Kevin McPherson, a managing principal who oversees the community.

Prior to the wiki, managing principals often were “siloed” in their own lines of business, which stunted their career growth.


    “Our primary focus for the wiki was to make people better at selling our services. But we also wanted to give career development and recognition,” McPherson says.

Xerox is riding the crest of a wave sweeping over U.S. businesses. In its annual report on the training industry last spring, the American Society for Training & Development found that nearly two-thirds of large U.S. organizations said they rely on “knowledge sharing” among their employees, including communities of practice and in-house experts.


    Also, the Alexandria, Virginia-based organization says 98 percent of companies provide on-the-job learning aids, with nearly 91 percent of employees taking advantage of them.

Awful economic projections have companies in a tight squeeze, which could accelerate the trend toward collaborative learning.


    “As unpleasant as the financial environment is, one of the things it will do is force changes in how companies provide education to their employees. We’re always going to have classrooms, but companies that use technology for employee learning probably aren’t going to see their budgets cut,” says Claire Schooley, an employee-learning analyst with Cambridge, Massachusetts-based Forrester Research.

Perhaps, but Xerox Corp. has been buffeted by the gloomy conditions. The company said in October that it plans to trim 3,000 jobs, or roughly 5 percent of its workforce, because of slowing corporate demand for its printers and copiers. It’s not clear how that will affect the launch of future learning communities.

Launching communities involves a lot of analysis. Vastola says the planning process at Xerox usually takes about three months. It begins with brainstorming sessions between learning leaders and top executives. The goal is identify critical roles within sales, consulting, service delivery and consulting, and then methodically structure learning to help people measure up.


    The critical jobs are reviewed and defined by about a dozen competencies. Each person in the role is assessed according to one of three levels of proficiency: foundation, intermediate and advanced, “knowing full well that no two people are at the same stage in their development,” Vastola says.


    Classroom instruction, e-learning courses, suggested readings, or on-the-job activities all could be part of a person’s customized learning agenda.

“The beauty of it is that learning really gets integrated into a person’s day-to-day job,” Vastola says.

The targeted employees are asked to complete an online survey that includes questions about the type of information they seek and which sources of information they use.


    Vastola says employees spend about 15 percent of their time in some type of learning activity at work. The purpose of communities is to help employees use this learning time more productively.

Although participation is voluntary, Xerox executives are hoping that employees seize the opportunity to learn from their peers in a setting that is more immediate—not to mention less time-consuming and less costly—than traditional “one to many” training.


    Xerox has no immediate plans to launch learning communities for every job title, but Vastola says all employees are being encouraged to pursue learning through Xerox Global Services Academy, which includes thousands of online courses as well as traditional training options.


    Efforts during 2008 centered on implementing the new communities, with the company expecting to have measurable results by the end of 2009, Vastola says.

Posted on December 22, 2008June 27, 2018

As the Scope of Employment Expands, So Does Employer Liability

In many employment relationships, the line between an employee’s personal life and his professional life has become blurred. Traveling sales representatives are provided with company vehicles for both business and personal use. In ever-increasing numbers, employees are given cellular phones or personal data assistants such as the BlackBerry so that they can work at any time, in any place. Employers enjoy a variety of benefits from this blurring, but they also risk exposing themselves to increasing liability. This article will examine how the blurring of the line between personal and professional lives has increased employers’ exposure to liability and suggest steps employers may take to minimize this increased risk.

    Generally, employers are only liable for the torts of their employees committed within the scope of employment. Unfortunately, the scope of employment doctrine has never had clearly defined edges, and now, with the blurring of the line between personal and professional lives, employers are exposed to ever-increasing liability. Courts have historically looked to three factors when determining if a tort falls within the scope of employment: (1) whether the employee committed the tort within the general time and place of his employment; (2) whether the employee was performing tasks he was employed to perform when the tort occurred; and (3) whether the employee’s acts were motivated, at least in part, by the employer’s interests when the tort occurred.


    Although the analysis of these factors has the potential to be fact-intensive, employers were historically able to avoid liability in cases which involved vehicle accidents that occurred while an employee was going to or coming from work. Traditionally, an employer was not liable for accidents that occurred while an employee was driving to or from work unless the employee was running a special errand for his employer. Therefore, an employer was not liable for an accident that occurred during an employee’s normal commute. Because of the blurring of the line between personal and professional lives, employers are more often being held liable for accidents that occur during an employee’s normal commute. There are two types of cases in which employers face liability: (1) those in which the accident occurred while the employee was driving a company-provided vehicle to or from work; and (2) those in which the employer provided the employee with a cell phone or PDA which the employee had with him when the accident occurred.


    In the first type of case, employers are being held liable for accidents that occur in a company vehicle regardless of whether the employee is actually performing any work-related tasks at the time the accident occurs. In these cases, courts are presuming that the accident occurred within the scope of employment and are requiring the employer to rebut this presumption in order to escape liability. Even minimal evidence showing that the employer has benefited in any way from the employee’s use of the vehicle may cause a court to deny summary judgment, forcing the employer to either settle or take its chances at trial. For example, if an employee expresses the intention of working after a personal social event where alcohol is consumed, the employer is not likely to be shielded from liability by its general policy against drinking and driving.


    If an employer decides to provide an employee with access to a vehicle, there are several policies employers can adopt to minimize their liability. First, the employer can charge the employee for any personal use of the vehicle. Alternatively, the employer can simply prohibit the employee from using the vehicle for any personal purpose. If an employee does have an accident while driving a company-provided vehicle, the employer should, at minimum, require the employee to submit a thorough accident report in order to help establish whether the employee was driving the vehicle for a purely personal purpose at the time of the accident. Establishing these facts at the time of the accident will help prevent an employee from manipulating his story if he is later disciplined or terminated. An employer must also train it supervisors and investigators to ensure that this information is captured at the time of the accident.


    In the second type of case, courts have imposed liability on employers based primarily on the fact that the employee had a company cellular phone or PDA with him at the time of the accident. Different courts have come to widely different conclusions regarding an employer’s liability for such accidents. In the most obvious of these cases, a court found an employer liable when it provided an employee with a cellular phone, the employee had an accident while driving and using the phone, and the employer had no clear policy against using the phone while driving.


    If courts limited employers’ liability to such situations, employers could easily impose policies prohibiting cell phone use while driving and properly instruct their employees as to the policies in order to shield themselves from liability. However, it is not that simple. Some courts have gone much farther in holding employers liable. In one such case, an employer provided an employee with a cellular phone and pager to keep with him while the employee was “on call.” The court upheld a jury verdict that found the employer liable after the employee had a car accident while driving with a blood alcohol content of 0.24 percent. The employee happened to have the cellular phone and pager with him when the accident occurred and claimed to have the devices because he was the contact person if something went wrong at the employer’s restaurant chain. The court upheld the verdict even though there was no evidence that the employee was responding to either a page or call, performing any work-related task, or benefiting his employer in any way by his actions.


    In another case, the employer was denied summary judgment even though it did not actually provide the cellular phone at issue. In that particular case, the employee gave out his own personal cellular phone number to his co-workers for work-related calls. At the time of the accident, a co-worker was calling the employee on his personal cellular phone. The employee did not answer the phone but was involved in an accident at the same time that his phone rang. The court denied the employer’s motion for summary judgment because it found that the employee might have been distracted by his co-worker’s phone call at the time of the accident, which could bring the accident within the scope of employment.


    As these scenarios illustrate, courts have greatly expanded the doctrine of scope of employment. In this subcategory of cases, employers are being denied summary judgment in cases that fall far outside the traditional sphere of liability. Employers may need to rethink their policies on providing employees with these mobile devices. Although frequent contact with employees is often desirable or convenient, employers should strongly consider providing such devices only when actually necessary. In addition, where such contact is absolutely necessary, the employer should enact a strong policy against the use of mobile devices while driving. Although some states already require the use of a hands-free headset while driving, employers cannot rely on a vague policy against breaking the law. Employers should go a step further and enact a policy completely banning the use of such devices while driving, whether or not hands-free. The policy must also make clear that the employee must turn off the mobile device or place it in silent mode while driving to avoid being distracted. Implementing a strict policy should be helpful in shielding the employer from liability, but the policy must be enforced.


    In addition, employers should enact a policy against using or even carrying such devices when the employee is out on personal business or pleasure. While this diminishes the value of a mobile device as a perk because the employee will then likely need to have a personal cell phone or PDA, it does draw the line between equipment used for business versus personal equipment.


    Employers must be aware of the increasing risk of expensive litigation and liability in this technological age. Accordingly, employers should develop conservative policies with respect to providing equipment such as vehicles or mobile devices to their employees and equally conservative policies regarding their use in order to minimize their risk of liability.

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