Policy evaluation

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Policy evaluation

One of our clients runs a very successful consulting firm. The firm has a central office, but consultants and service providers are often required to travel to a client’s office in their own cars. A policy was developed to deal with this, which states, “Each employee who travels on company business must have a clean driving record, and must have insurance.” Our Risk Audit revealed that, as often happens with policies, management did not monitor these requirements. We suggested that our client either enforce its policies or drop them, because in litigation an un-enforced policy is much like a law you wrote and chose to ignore. It looks bad and is difficult to explain away in front of judges and juries.

The client began to enforce policies, and, based on enforcement, to drop or re-write some of their policies. But the driving-on-company-time policy caused quite the stir. “What does clean driving record mean?” and “What does have insurance mean?” were two big questions that caused a lot of vigorous debate.

With this debate raging in the background, our client called and asked what should “clean” mean, were so many driving around without insurance? We discussed the matter for some time and came to these conclusions: • If the business defined the word “clean” it would exclude potential employees (and current employees) on the basis of driving history, not on the basis of professionalism.

• According to an employment lawyer, this could be ground for a lawsuit, since that requirement isn’t specific to the job task. • The ultimate arbiter of who should and who should not have driver’s license is the state. And, when the state already has set the definition through a point system and the courts, it may not be within the purview of the employer to impose a level of performance that is at odds with state requirements.

• The state in which this company is located has mandatory insurance requirements. Although they are low requirements, they are still mandatory. Checking with their insurance carrier they found they were covered for damages caused by employees driving their own cars while on the job for up to a million dollars.

Based on this, the policy was rewritten to read “Each employee who travels on company business must have a valid state drivers license and must have insurance coverage that meets or exceeds that minimum requirements of the state.” Further, for $600 additional dollars the company’s policy limit was raised to 3 million dollars from 1 million dollars. The company then had an enforceable policy requiring valid driver’s licenses and insurance that meets state laws. The furor died down almost immediately.

When drivers’ license and insurance coverage was verified, two out of twenty-nine employees had insurance lapses, and three had suspended licenses because of unpaid parking tickets. No ticket was for more than $30.00, and none of the employees was aware of the suspension. The five employees resolved their problems within the week, and were thankful for the information.

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