Caution Ahead
Avoid legal pitfalls when using telematics to monitor employee drivers.

Telematics, GPS-enabled systems that are installed in fleets and record and transmit information regarding a company’s vehicles, have been receiving a lot of buzz lately. The technology offers numerous benefits, including computerized maintenance reports, remote vehicle diagnostics, vehicle tracking, remote fleet management, loss prevention, temperature-sensitive freight monitoring, satellite navigation and emergency warning systems. When drivers have this type of technology installed in their vehicles, they can connect with operators and routers by pushing a button, which will automatically convey their location, vehicle identification number and other information. Drivers can even have dashboard computers installed in their vehicles.

While there are plenty of benefits, there is potential trouble to consider as well. The laws and regulations regarding telematics for commercial drivers are still struggling to catch up with technology, and laws that are in place vary from state to state. While there are many unknowns, there are some key risk factors that construction business owners should consider.

Privacy Issues
There are advantages to tracking drivers using GPS systems. In 2009, a city worker in Wellman, Iowa, was fired after a GPS device installed on his work truck proved he was regularly not putting in a full day’s work. In that case, the city was well within its legal boundaries to monitor the employee.

However, laws vary by state, and employers who consider using GPS systems or other telematics devices to track their drivers should understand the regulations. Some states require employee notification if an employer is utilizing electronic surveillance. Others have laws regarding an employer’s use of video surveillance. Generally, though, federal law allows employers to monitor work-related use of telephone, email and other communications.

Employers who install or allow drivers to use certain telematics and other Internet-enabled devices in their vehicles should consult local laws and regulations and develop policies that clearly iterate the appropriate usage of such devices. They should alert their employees to the fact that they may be monitored, as instituting a policy and educating employees about potential monitoring can serve as an effective deterrent to fraudulent behavior and typically removes the question of whether surveillance is legal.

Managing the Data
The management of telematics data can lead to legal issues as well. The reason telematics data is so powerful in business is also a reason it can lead to employer liability: it keeps employers fully informed. For example, in addition to improving vehicle management and route monitoring, telematics can help companies recognize good drivers, identify unsafe drivers and re-educate those drivers who are responsive to training. Telematics can also provide data, such as miles traveled, average trip speed, estimated percentages of time traveling at more than 15 mph over the speed limit and dangerous braking events.

Inadequately managing this data may provide fuel for plaintiffs’ attorneys, who could use the information to demonstrate how a company was negligent in managing its drivers. This is not to say that employers should bury their heads in the sand and ignore telematics data, but they should recognize that ignoring telematics-supplied warning signs can present its own legal issues.
Distracted Driving
The dangers inherent in driving distractions, such as cellphone use or the use of other electronic devices, are becoming increasingly acknowledged. The installation and use of telematics technology that distracts the driver of a vehicle may impose great liability on the employer. Only a year ago, a Coca-Cola saleswoman was talking on her cell phone while driving and hit and injured another woman. The injured woman took the company to court, and the jury awarded her $22 million, citing Coca-Cola’s failure to implement a sufficiently stringent cellphone policy.

Employers should be aware of the telematics technology they utilize in their vehicles and other equipment, including how distracting this technology can be to the driver. In addition, they should consider implementing safety policies, such as making it clear to employees that electronic devices should be utilized only when the vehicle is parked in a safe location, in order to limit liability from the use of devices while driving.

Vicarious Liability Vs. Negligent Entrustment
There are different types of liability to be aware of in regards to the use of telematics. Vicarious liability holds employers liable for the negligent driving of employees in the scope of employment. Negligent entrustment holds employers liable for their own negligence in choosing an employee to drive a vehicle.

Negligent entrustment is a particularly worrisome liability for employers because such a lawsuit can often be successful even when the employer did not know that a driver was unfit to operate a vehicle. These lawsuits carry the risk of severe punitive damages awards.

In order to limit liability exposure, employers need to develop comprehensive policies and thoroughly investigate each company driver. In order to limit distracted driving and exposure to negligent entrustment lawsuits, companies should have a “no cellphone” policy in place and regulate how any other electronic devices are used in vehicles. Every company should regularly review its telematics data, and if the data presents reason to believe that a particular driver is unsafe, the employer should take immediate and consistent action.

Managers, mechanics, routers and drivers must understand telematics and their role working with the technology to avoid legal pitfalls. Those employers implementing such solutions with their fleets should make sure to consider factors that will help improve vehicle safety, reduce the chance of litigation and allow the company to defend itself effectively if a lawsuit is filed.