On a clear day in September 2005, Don Svec was driving a van for his employer, family-owned electrical company Berry Electric Contracting Co. He was lost on his way to a delivery in a Chicago suburb when witnesses say he zoomed through a red light and smashed into a Saturn driven by 70-year-old Dorothy Barnes.

Barnes underwent five surgeries to repair injuries to her neck and pelvis. More than a year later, Barnes still suffers from vision problems and limited mobility in her neck and has a piece of metal sticking out of her pelvis to hold it together.

After the accident, she hired a lawyer, who discovered that Svec was looking down

at the navigation system on his BlackBerry when the accident occurred. Barnes sued Svec and Berry Electric. One day before the claims were set to go to trial in December 2006, the company settled for $4.1 million.

Accidents such as Svec’s are becoming a source of anxiety for employers who are beginning to realize they will be held liable if their employees do something dangerous–or stupid–while using an employer-issued PDA device.

“In any suit arising from a car accident, the plaintiffs’ attorney will come after the employer and obtain the BlackBerry records and see if what the person was doing was work related,” says Greg Hare, a partner at Ogletree Deakins. “It’s clearly a liability.”

While BlackBerrys and other smart phones have undoubtedly made it easier to do business 24/7, they’ve also opened the door to lawsuits against employers that issue the devices to their workers. And these suits aren’t limited to distracted-driver claims.

On The Clock

One of the costliest sources of PDA-related litigation is employees. Over the past year, companies have seen an avalanche of wage-and-hour litigation from workers who claim they are owed back pay for uncompensated overtime. And nothing could be more solid

evidence of after-hours work than records of evening and weekend activity on PDA devices.

“The BlackBerry creates an electronic evidence trail on the company servers that Jane Smith sent 22 work-related e-mails on a Saturday,” says Michael Gray, a partner at Jones Day. “This can be a serious source of non-clocked time, and we’re seeing cases that allege this.”

Employers are most vulnerable to these types of suits when they issue the devices to non-exempt employees–those who do not fall under the Fair Labor Standards Act’s definition of executive, administrative or professional workers. These employees must be paid overtime. When employees take PDAs home with them, however, it’s difficult for the company to control or keep track of how much time they are spending on work, which increases the likelihood of employers making mistakes in overtime pay.

“Even if you tell employees to shut them off when they go out the door, if they don’t and they’re still working, they have a good argument that the employer should be on the hook to pay for that work,” says Jeremy Roth, a partner at Littler Mendelson.

While some employment experts caution that employers shouldn’t issue PDAs to non-exempt workers, that’s not always practical. For example, a company may need to have non-exempt IT personnel or facilities managers on call to handle emergency situations. When it comes to these employees, the company must track the hours worked carefully, set policies for when employees are expected to have the devices on and be selective about who gets the devices.

“Tell the employees what the rule is and monitor their compliance with it,” says Harriet Lipkin, a partner at DLA Piper. “If they ignore the rule and its compensable time, you have to pay, but you can discipline an employee for repeated failure to comply with the policy.”

Further, many companies have non-exempt employees with PDAs that they don’t even know about. In recent years, many employers have proactively reclassified broad categories of workers as non-exempt–and those employees still have their BlackBerrys.

“Unless you’re going to take the devices away,” Gray says, “you have to be prepared to monitor their work and compensate them for it.”

Tiny Hazards

If the wage-and-hour problem wasn’t enough to make employers think about taking back employees’ smart phones, the American Physical Therapy Association issued a report in December officially recognizing “BlackBerry Thumb” as a painful condition that causes throbbing, swelling and tendonitis and may require cortisone injections or surgery. While OSHA has not yet recognized the condition as a workplace hazard, PDA overuse might still lead to claims. An employers’ best option in defending such a claim is to argue that the injury is self-inflicted and therefore not compensable, but that theory has not been tested.

“Clearly, the opposable thumb is not supposed to be used for typing, and doing so can cause pain,” Roth says. “It’s no different from any other work-related repetitive motion injury.”

But of greater concern than the issue of whether BlackBerry thumb will be a compensable injury is the fact that portable e-mail devices greatly expand the scope of when someone might be considered “on the job” for workers’ comp purposes. The standard in workers’ comp cases is that employers are responsible for any injury that “arises out of or in the course of” employment. Therefore, in any instance in which an employee is engaged in a work-related activity–be it in their vehicles, at home or while walking down the street–an employer could be liable for any resulting injury. Hare, for instance, cites cases in which someone is injured in a fall because they were answering a work-related e-mail while crossing the street.

“It seems like a stretch, but the law morphs and adjusts to a modern way of life,” Hare says. “I’ve seen a case where a telecommuter fell down while running to her phone to answer a work-related call, and the workers’ comp board found that her injuries were compensable.”

And as Berry Electric learned, this liability extends beyond workers’ comp to any harm employees cause to others while thumb-typing away.

“Any prudent employer has incorporated rules about handheld devices into their policies about cell phones and other electronics,” Hare says. “It won’t be an airtight defense, but it will help.”

Putting On The Brakes

That’s really the best a company can hope to do. As long as smart phones remain the essential business tools they are today, these claims will occasionally arise. No matter whether the claim is unpaid overtime, injury related to excessive PDA use, or a car accident arising from an employee using a BlackBerry while driving, the only way an employer can limit its exposure is by having a good policy in place. That will help the company show that the employee was not engaging in dangerous or harmful activity at the company’s behest.

While the mere existence of a policy will not completely exculpate the company, it will diffuse any argument that it hasn’t done enough to stop improper PDA use. And as with any employer policy, the more seriously it takes enforcement and training, the better chance it has of staying out of trouble.

“If you disseminate the policy, hold training sessions and discuss it with your employees,” Lipkin says, “the judge or jury will recognize that you’ve got an employee violating the rule.”