Down time claims are hard for a number of reasons. The first reason is that the tow company might be a financial pickle because one of its truck is out of service. After all, a tow truck is a tow company’s principal revenue source. The second reason down time claims are hard is because insurance companies often fight paying a down time claim tooth and nail. This means that the road to recovery is a long one at a time when tow companies could really use the money.
Tow companies are often to quick to complain about unjust tow rotation policies. But when the agency retaliates against the complaining tow company for making the complaints, the speech of the tow company may be constitutionally protected by the First Amendment of the United States Constitution.
Towing is a competitive business. Every revenue source counts. Many tow companies seek to increase their bottom line by serving on tow rotations. Sometimes, “getting on” a tow rotation is easy. Other times, a tow company might struggle. In situations like these, I’ve seen many a tow company pay a hefty penny to a lawyer for an answer to the following question: “The Sheriff/Chief/Captain won’t let me on the rotation. Don’t I have a right to join?” The answer is likely no unless, of course, you have something to “point to.”
Tow rotations present some of the most hotly debated legal subjects in the tow industry. One of the most common issues is a vehicle owner’s right to choose their own tow company in the event of an accident.
On March 27, in the case of Big Wheel Truck Sales v. Safety Insurance Company, Case #16-P- 318, the Massachusetts Court of Appeals held that the removal of a vehicle from the site of a single-vehicle crash, without more, does not constitute a repair, or “remediation,” of the property on which the crash occurred and, therefore, is not payable under a policy of liability insurance issued on the wrecked vehicle.
For those of you that have attended a TowLawyer seminar, you might remember Michael McGovern’s notable way of teaching the possible risks of wrongfully perfecting tow liens. It goes something like this, Mr. McGovern approaches a tow operator sitting in the front row and, much to their surprise, temporarily takes one of their personal belongings like a hat, pen, notebook, etc. and informs the owner that he is not giving it back. The tow operator usually exclaims something like “you can’t do that!” Mr. McGovern then smiles and asks: “why not? What that’s called?” Most every tow company in the room says “stealing” or theft or the like and then McGovern (correctly) compares his action of stealing the hat, etc. to a tow company wrongfully holding or refusing to release a towed vehicle without a legal right.
In the past few years, the lawyers at www.towlawyer.com have had the opportunity to travel all over the country and hear about different ways that tow companies pay drivers. Some companies prefer a salary. Others pay by the hour. And some, including most of the companies in my hometown of Kansas City, pay a commission. All of these arrangements have their own positives and negatives and this article is not intended to be an endorsement of any structure provided, of course, it has been carefully screened for its overtime and minimum wage legalities. However, one common issue faced by most payment structures is how to handle “on call time.”
Tow companies often invest thousands of dollars in training employees how to operate expensive equipment. It would seem reasonable that tow companies should reap the rewards of these investments. Conversely, it seems unfair that a tow operator should accept this training only to start his own tow company or, even worse, accept employment with a competitor. Often times, a tow company will seek to solve this problem by requiring employees to sign a document containing post employment restrictions such as non-disclosure agreements, non-solicitation agreements, and non-compete agreements. Because the legalities of each type of agreement are different, a basic understanding of each is helpful.
According to my thesaurus, common synonyms for “bankruptcy” include insolvency, impoverishment, and financial despair. However, tow companies who have dealt with a bankruptcy claim might include another a term: a pain!
“March Madness” has begun and hoops is on my mind. It strikes me that running a tow company, in some ways, is like playing basketball. There are offensive moves designed to increase revenue, such as implementing certain billing techniques, getting on tow rotations, and buying new equipment. And then there is playing defense which means doing everything you can do to protect your company from outside forces that can cause financial ruin to your company such as lawsuits, insurance companies, and regulatory agencies. Think of your employee handbook as your defense. It might not make you any more money but it will certainly help you keep the money you’ve got.
