When increased productivity leads to more lawsuits: How some efficiency initiatives can land you in legal hot water
By Richard Alaniz
For Domino’s Pizza, speedy delivery was more than a promise—it was a guarantee: 30 minutes or it’s free.
When executives at the pizza chain coined the marketing campaign, they probably didn’t think about potential legal ramifications. But legal ramifications followed. Company drivers were involved in numerous accidents that led to lawsuits, with some plaintiffs claiming that the company was liable because it encouraged its delivery people to drive unsafely in order to get pizzas to customers within the half-hour timeframe. According to a report in one trade publication, the last straw for Domino’s was a $79 million verdict that a St. Louis jury awarded a woman who had been hit by an 18-year-old Domino’s driver who ran a red light. In 1993, the company abandoned its 30-minute guarantee.
Your company may not employ high school kids to zip around town trying to beat the clock in order to deliver a hot pizza. However, in the drive to increase efficiencies and improve productivity, some companies may unwittingly find themselves in the same situation that Domino’s experienced. Many companies do not consider how they may be opening the door to increased legal liability and negligence lawsuits when they engage in extensive studies, hire outside consultants, and use routing software programs to determine the most efficient travel routes. In effect, employers are pushing employees in a way that may make them believe they should cut corners.
Companies that utilize technology to improve productivity may create an unhealthy reliance on technology or inadvertently encourage reckless activity—or at least, that is what a plaintiff’s lawyer may claim when employees are involved in accidents. Consider a company with a field force that averages six sales calls a day. With the right technology, dispatchers and managers can reroute their drivers to squeeze in one more call before the shift ends. In fact, an employee’s performance reviews and bonuses may be based on the ability to complete just one more call. However, this extra call may leave very little time for delays, and an employee who falls behind schedule may rush to get to the next project done on time. A distracted or hurried employee is much more likely to cause an accident. If someone is injured or killed, the first place they will look for compensation will be the company.
This is just one scenario where productivity gains can make a company more vulnerable to potential lawsuits. There are others as well. By identifying areas of potential liability and addressing those risks, employers can still maximize employee productivity while minimizing exposure. Some of these areas include:
· Over-reliance on Technology
Recently, one trucking company found itself as the defendant in a wrongful death lawsuit after one of its drivers struck an overpass in Pennsylvania. That accident knocked off a container on the driver’s truck that hit an SUV and killed the SUV’s driver (the truck driver is facing vehicular homicide charges). According to one report, not only did the driver fail to measure the container, but the truck was not permitted to carry an oversize load, and the driver could not detail his route nor report his destination because he was relying on his GPS system.
Companies must stress to all employees what their technology can do and what it cannot do. Simply having a GPS in a truck or utilizing routing technology does not take the place of proper planning or common sense. While employees may still make errors, some common sense can help reduce a company’s exposure in the event of a lawsuit by proving that the driver did not follow proper procedure.
· The Electronic Trail
When companies install tracking software, they may not think about the implications of the records that these devices can leave. Several years ago, a commercial truck driver rear-ended a car and injured the other driver during what was supposedly the tenth hour of his ten-hour trip. The other driver sued the company for negligence. During the trial, the truck’s GPS system became an issue when the plaintiff’s attorney was able to prove that the driver had falsified his driving log and that he had exceeded the ten-hour limit several times during the week before the crash. The company ended up admitting liability and settled on compensatory damages claims.
Similarly, equipment that records an employee’s productivity could also be used to hold the employee and the company liable in a lawsuit. In the event of a trial, an attorney who can prove that an employee was not performing up to safety standards before an accident can make a dramatic impact on a jury.
These examples demonstrate that it is imperative for employers to stress the importance of following all regulations. It can be very tempting for employees to squeeze in a few extra minutes during a run, particularly during the current economic climate when a little extra money can make a big difference. However, employers must make it clear that they will not tolerate falsified records and that consequences exist for employees who are caught doing so.
· Too Much Equipment
Not so long ago, employees only had landlines (or perhaps CBs) to communicate. Now, cell phones, GPS devices, personal digital assistants, and computers have become common. While all of these devices can help improve efficiencies, they can also be distracting. And a distracted employee can be a dangerous one, which can open companies up to lawsuits.
· Unclear Expectations
The latest cutting-edge technology can’t make up for adequate training and clear communication about a company’s goals and expectations. While everyone is trying to do business more efficiently and save money, a multi-million dollar negligence verdict and the bad publicity that results can quickly wipe out any savings from increased productivity initiatives.
Companies need to offer training and education to their employees about the paramount importance of safety. They should also consider whether their current compensation structures encourage employees to behave in unsafe ways. It could be worthwhile to consult with attorneys who can review current policies and procedures to ensure that they are designed with safety in mind. A company that can prove it has clearly outlined its expectations is in a better position to defend itself against a negligence lawsuit when one of its employees flouts company policy.
Proper planning, enforcement of regulations, and appropriate training do not have to be incompatible with increased productivity. After all, in 2007, Domino’s Pizza brought back the idea of a half-hour delivery with its “You Got 30 Minutes” campaign. However, under the category of “Legal Stuff,” the Domino’s website stresses, “Because safety is a priority, ‘You Got 30 Minutes’ is not a guarantee, but an estimate.”
About the author:
Richard D. Alaniz is senior partner at Alaniz and Schraeder, a national labor and employment firm based in Houston. He has been at the forefront of labor and employment law for over thirty years, including stints with the U.S. Department of Labor and the National Labor Relations Board. Rick is a prolific writer on labor and employment law and conducts frequent seminars to client companies and trade associations across the country. Questions about this article can be addressed to Rick at (281) 833-2200 or email@example.com
You may like these other stories...
Event Date: August 21, 2014, 2 pm ETMeet budgets and client expectations using project management skills geared toward the unique challenges faced by CPAs. Kristen Rampe will share how knowing the keys to structuring...
Developing a strategic alliance with a financial advisor may be just the ticket to grow your accounting practice, particularly if many of your clients are affluent. An added benefit is that this type of pact can avoid raised...
Event Date: August 20, 2014, 2:30 pm ETIn this session we'll review best practices for how to generate interest in your firm’s services. Topics include:Web Based Marketing StrategiesAppointment SettingNetworking...
Upcoming CPE Webinars
In this session Excel expert David Ringstrom helps beginners get up to speed in Microsoft Excel. However, even experienced Excel users will learn some new tricks, particularly when David discusses under-utilized aspects of Excel.
FRF for SMEs Series--Measurement and Disclosure Principles for various Consolidations and Business Combinations, Part 4B
This webcast will focus on accounting and disclosure policies for various types of consolidations and business combinations.
In this session we'll review best practices for how to generate interest in your firm’s services.
Meet budgets and client expectations using project management skills geared toward the unique challenges faced by CPAs. Kristen Rampe will share how knowing the keys to structuring and executing a successful project can make the difference between success and repeated failures.