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Legal Considerations of Location Tracking for the Construction Industry

More and more construction companies are investing in fleet management applications that use GPS and other location tracking technology to increase efficiency, manage risk and reduce costs.

Recent federal regulatory developments may cause the adoption rate of location-tracking applications to increase even more quickly. Although construction companies can benefit greatly from the use of such technology, improper implementation can expose a firm to significant legal risks. Companies using location tracking technologies to monitor driver behavior need to develop workable policies that take relevant legal considerations into account and help set privacy expectations for employees.

REGULATORY DEVELOPMENTS

Recent rules promulgated by the Federal Motor Carrier Safety Administration (FMCSA) and the Department of Labor (DOL) may cause more firms to seek to implement location tracking solutions.

The FMCSA announced a final rule in December 2015 mandating the use of electronic logging devices (ELDs) in most commercial motor vehicles with respect to which drivers are required to record their hours of service. The FMCSA’s prior ELD rule was vacated by the Court of Appeals for the 7th Circuit in 2011. However, on Oct. 31, the same court denied a petition by the Owner-Operator Independent Drivers Association, Inc. and two individual drivers for judicial review of the 2015 rule.

Under the 2015 rule, covered vehicles must be outfitted with ELDs by December 2017 (companies will have an additional two years to bring vehicles with certain older electronic monitoring technology into compliance). Construction firms that are not otherwise exempt will need to ensure they meet the applicable compliance date.

On Dec. 1, 2016, the DOL’s final rule concerning the salary threshold required for certain employees to qualify for exemption from overtime pay under the Fair Labor Standards Act (FLSA) went into effect. Under the new DOL rule, otherwise eligible employees must be paid an annual salary of at least $47,476 (to be increased in future years based on inflation) to qualify for the exemption.

While the DOL’s final rule does not affect classification of workers whose primary duty involves physical skill (these workers must be classified as non-exempt), construction companies may need to reclassify front-line supervisors and others as non-exempt after Dec. 1. If employees are reclassified, companies may look to applications that use location tracking to accurately record hours worked by such employees.

TRACKING EMPLOYEES ON DUTY

Generally, courts have held that employers can use GPS to monitor employees using company vehicles while they are on duty without violating reasonable employee expectations of privacy. As an example, the Federal District Court for the District of Missouri held in 2005 that the secret installation of a GPS device in a company vehicle for purposes of investigating theft did not violate employee privacy rights because the employee had no expectation of privacy when traveling on public roads.

Additionally, several states (including California, Connecticut, Delaware, Illinois and Texas) have enacted laws that permit location tracking in certain circumstances. For example, in California and Delaware, the owner or lessor of a vehicle can legally track the location of that vehicle. In Connecticut, employers can electronically monitor employee activities on employer premises (which likely include employer-owned vehicles), but employers must post conspicuous notices regarding such monitoring (there are exceptions related to certain investigations of employee misconduct).

RISKS OF TRACKING OFF-DUTY EMPLOYEES

While on-duty monitoring is acceptable (assuming any applicable legal requirements have been met), an employer that uses GPS or other location tracking technology to monitor the behavior of off-duty employees runs the risk of violating state law.

In 2013, a New York state court held that the attachment of a GPS device to a state employee’s personal vehicle suspected of falsifying time records was an unreasonable search because the state did not limit the gathering of information to on-duty hours. While this case involved a public agency and not a private employer, it serves as an important reminder that using GPS to track off-duty employees, even in company vehicles, can constitute an unreasonable invasion of privacy in some instances.

Employers that issue company phones with GPS capability also need to make certain they don’t track employees’ locations during off-duty time. In May 2015, a California woman terminated for uninstalling a GPS app from her company phone sued her employer, alleging, among other things, wrongful termination and invasion of privacy. Arias v. Intermex Wire Transfer, 15-cv-01101 (E.D. CA, 2015). The plaintiff alleged that the employer required her to keep the phone on 24/7. According to the plaintiff, the employer’s representative admitted the app was being used to monitor off-duty activity. The company representative allegedly went so far as to brag that he knew how fast the plaintiff was driving at specific moments because of the app. The case was settled out of court, but the employee had originally sought more than $500,000 in damages.

BEST PRACTICES FOR EMPLOYERS

Construction companies seeking to implement GPS and other location tracking systems should do so with several best practices in mind. Company representatives should consult with legal counsel familiar with the laws of each state where the company wishes to use location tracking. GPS and other location tracking technologies should only be used on company-owned vehicles and mobile devices in connection with the company’s business needs (including asset management and route optimization). Monitoring employees’ behavior should always be restricted to on-duty time (or to good-faith investigations that employees are improperly using company equipment).

In order to reduce any expectation of privacy that employees may have with respect to company-owned equipment, companies should adopt written location tracking policies. Employees should be required to sign an acknowledgement of receipt of the company policy, either as a standalone document or as part of an employee handbook or policy manual.

GPS and other location tracking technologies offer a myriad of benefits to construction companies. Given recent regulatory developments, more firms may seek to make use of these technologies. By becoming familiar with applicable law, limiting the use of location tracking to specific business needs and being transparent with employees regarding location tracking, employers can minimize their legal exposure.

One Reply
  1. I like that you talk about how tracking should only be used on company vehicles and equipment. It makes sense that monitoring an employee’s behavior in this manner is likely against the law when they’re not on the clock. This is something for any rental or construction contractor to keep in mind because GPS tracking can be a very valuable tool if it’s used properly.

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