Employers Guide to Personal Use of Company Vehicles

Allowing employees to use company cars for personal use involves several considerations for employers. You’ll need to ensure your business has the most appropriate insurance policy and know the liability issues, tax implications, etc.

Here is everything you need to know before you provide your employees with vehicles.

Legal Implications

Get advice on the liability, tax, and insurance implications of allowing staff to use a company car outside of business hours.

For example, a vehicle insurance broker will know which policy covers employees outside of work hours when using the car for personal use.

Accidents happen, and you’ll want to know your obligations before an employee is involved in a car accident. Additionally, if they caused it, and there are injuries, how are you liable.

In some states, there are tax implications when company vehicles are used for personal use.

Using a company car for private travel can be viewed as a benefit and incur a tax. Who reports it and pays for it? Seek advice from an insurance or car lease broker.

Who Should Get a Company Car

If you’ve been handing out cars without determining who should be entitled to one, you must list some essential criteria.

The factors determining who gets access to a company car must be clearly written and outlined, so your staff understands the expectations. Without clear elements, you’ll sow discord throughout your ranks from people who feel more entitled than others.

Make a limit for the number of miles that your employees must travel every year. This travel needs to be explicitly for your company.

Some workers might receive a company car as one of the benefits of their job. While it might seem like a perk, it should also be linked to your expectations for making them travel when needed.

Your company car doesn’t need to be a standard car or truck. If you want to ensure it doesn’t get used for employee’s personal needs, buy an alternative vehicle.

A large box delivery truck or a compact car covered in company decals is far less likely to be used for personal needs.

Considerations

Establish criteria for employees eligible to use company cars for personal use. This may include a valid driver’s license, a clean driving record, and compliance with any age restrictions.

If you’re giving them a vehicle that requires more than the standard automobile license, check their qualifications before you hand them the keys.

Check their driving record, as well. You need to look back at more than a few years to check for any pattern of bad behavior.

DUI, DWI, and Insurance

If they have a DUI or DWI, you can disqualify them for a company car based on insurance issues.

The impact of a DUI (Driving Under the Influence) or DWI (Driving While Intoxicated) on a company car insurance policy can vary depending on the insurance provider, the specific terms of the policy, and local regulations.

Employers may want to conduct regular checks on employees’ driving records and enforce strict policies regarding impaired driving to mitigate risks associated with DUI or DWI incidents.

Consulting with an insurance professional and legal counsel can help companies navigate these issues and make informed decisions.

Disabilities

If disabled employees need a company car or parking spaces, they can ask for reasonable accommodations because of the ADA. However, you can reconsider if employees take medication that impacts their reflexes, impairs their vision, or upsets their orientation.

Additionally, check your insurance coverage for vehicles used by drivers with disabilities.

Set Reporting Standards

If you want to ensure your staff doesn’t take advantage of company vehicles, lay out the standards beforehand.  Make sure every journey is documented.

Usage

Develop clear and comprehensive policies regarding the personal use of company vehicles. Specify when and where private use is allowed, and outline any restrictions or limitations.

Address issues such as smoking, transporting non-employees, and prohibited activities (e.g., using the vehicle for commercial purposes).

Following that, provide standards for reporting their vehicle usage. This ensures that your vehicle won’t be used for anything other than for work.

Mileage

At the very least, include a clipboard in your car that’s a permanent fixture. Put together a simple spreadsheet where you ask your drivers to write down whenever they use the vehicle. They should report mileage when they sit in the car and arrive.

Each trip must accompany a summary of their work while using the car.

If they have the car for a more extended period, make them include receipts, invoices, and other records that you can use to back up their mileage.

If they incur tickets while driving, assure them that those tickets are their responsibility. They can claim ignorance or lack of foreknowledge without an outline of these details. Don’t allow them to make this claim by outlining everything clearly.

Use Tracking Tech

If you can afford to do so, implement a system for tracking and recording mileage for personal and business use separately. This is important for tax purposes and to monitor overall vehicle usage.

When you know the mileage, you can also learn about the fuel usage.  Clearly define the company’s policy on fuel usage for personal trips. Decide whether employees are responsible for covering the fuel cost for personal use or if it’s provided by the company.

Disciplinary Consequences

Every one of these requirements that you set out for your staff needs to be backed up with consequences.

Without consequences, you won’t have any purchase over holding your staff accountable for using your vehicles for personal use.

Expect some amount of violation. If you send your staff out to pick up something from a shop or a grocery store, they might pick up a few things they need and save themselves a trip.

If you’re noticing personal trips are taking too much time or causing problems at work, this is a reason to take action.

Standard violations should cause a warning or a fine. If your driver racks up tickets or causes an accident, you must inform them that their privileges may be removed.

If your car is used for the employee’s personal gain or to gain a loan, consider these violations to be enough to take away their privileges. Following this, you may consider taking legal action.

Every company has different standards for what vehicles are used for. However, violating the law or putting someone in danger is reason enough to take the keys away.

Final Words

By addressing these considerations, employers can create a clear and comprehensive framework for allowing employees to use company cars for personal use while minimizing risks and ensuring compliance with relevant laws and regulations.

It’s advisable to seek legal advice to ensure company policies align with local laws and regulations.