Legally astute managers are able to limit their company’s risk by recognizing potential liability during business planning. Spotting potential legal issues and understanding when to contact counsel are important management skills. Suppose that in the Theory to Practice problem you are a CCT manager and that Crusoe presents his logistics and operations improvement plan at a management meeting. Part of Crusoe’s
plan involves converting the delivery truck drivers from employees to independent contractors. Crusoe claims that this will save employment taxes and limit CCT’s liability for driver negligence. Crusoe recommends having the drivers sign independent contractor agreements and paying them based on a monthly fee rather than as hourly employees. After the meeting, you receive the following e-mail from the vice president of operations:

To: All managers

Fr: VP/Operations

Re: Crusoe’s plan

Please give me any feedback or concerns you have about Crusoe’s recommendations presented at today’s management meeting. I will be drafting a summary memorandum for top-level management next week, and we will be moving to implementation of some or all of Crusoe’s recommendations shortly.

Draft a three- to five-paragraph e-mail to your vice president concerning the proposal to convert drivers to independent contractors. Using your knowledge of agency law, be sure to raise any pertinent legal issues and discuss potential liability in explaining your concerns. Conclude the e-mail with a brief recommendation on how best to proceed.