Your company may be associated with a collision if your logo is present on the vehicle, even if the driver was not operating under your authority at the time.

This article is from the Winter 2016 issue of The Quill. To view the full issue, visit The Quill archive.

Imagine this scenario: One of your company’s independent contractors (ICs) is hauling a load that he should not be hauling or is driving his truck while conducting personal business. The IC has not removed your company’s decal, DOT number and logo (collectively referred to as “Identification Devices”) from the side of the truck. While operating the vehicle, the IC is the at-fault driver in a collision. Every person who shared the road with the driver that day – before, during or after the collision – assumed that he was operating under your authority and at your direction.

Situations like the one described above are commonplace, and they may create more problems than just causing your company’s name to be associated with the collision. Similar circumstances have led to litigation in which the company whose Identification Devices are on the vehicle is drawn into a lawsuit because of the collision, even when the IC wasn’t acting under the company’s authority at the time.

Jurisdictions across the country have taken different approaches to dealing with this tricky issue, sometimes referred to as “logo liability” or “lease liability.” There are certain steps you can take to try to protect yourself. One of the most important things your company can do is carefully spell out the obligations regarding Identification Devices in the IC’s lease agreement.

Points to consider addressing in the lease agreement are:

• How and when the IC will be informed that they are operating under your company’s authority
• When such authority will begin and end
• When your company’s Identification Devices may be present on the IC’s vehicle
• Who has the responsibility to remove and/or return Identification Devices upon termination of the lease agreement
• Any punishment or action that may be taken on the part of your company in the event the IC violates any of these provisions

Be sure to record the date and time of the termination of any lease. Keep a copy for your records and provide a copy to the IC as well. This way, if the IC continues to operate with your Identification Devices following the lease termination, you may be afforded some liability defense.

Having policies addressing Identification Devices in your lease agreement is very important, but it is equally important to follow through and enforce these practices. Make sure your ICs are aware of the restrictions and their responsibilities regarding Identification Devices, as well as the repercussions for failing to abide by the lease agreement. Despite the unpredictable legal landscape surrounding logo liability, having a lease agreement that thoroughly spells out your company’s Identification Devices policy is one way that you can help protect your company against this potentially devastating issue.

One final note regarding Identification Devices: IC vehicle usage is not the only concern. Any time you trade in or sell company equipment that displays your Identification Devices, it is a best practice to completely remove them before the equipment leaves your yard. Even equipment staged at an auction yard or dealership while showing your Identification Devices may create the potential for your company to be drawn into the dollar and time expense of litigation.