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Help Center - Company Assigned Vehicles
Question:
We have around 10 field employees who are assigned company vehicles. The employees are currently permitted to drive the vehicles from home to work each day. Some of our drivers have a very long round trip distance for such activity. We have been debating either requiring the vehicles to be left at the office and leaving the travel responsibility from the employees home to work with the employee or we were wondering if we could implement such a policy that would let us only cover a certain number of miles. As an example the company would only cover X number of miles from their home to work and the rest would fall upon the employee. The issue we have is the majority of the techs live within a few miles of the office, but we have a few that have around a 120 per day mile round trip from their home to the nearest office. A related question to the above would we be able to say if your round trip mileage is over X miles you are required to just leave the vehicle at the office each day vs. trying to work out a split arrangement?
Response:
To our knowledge there is no federal or state law which would prohibit an employer from offering a company car and it is certainly within the employer's discretion to do so. Likewise, there is also no law which would prohibit an employer from offering a company car to one or a few employees while not offering such a "perk" to others. To the extent you offer better benefits or perks to some employees or not others, you'll want to keep in mind that there could be potential for unlawful discrimination claims if the basis, directly or indirectly, for the disparate offering of benefits is protected class status. In other words, the criteria for deciding to offer one or a few employees a company car and not others must be neutral to avoid potential claims of disparate treatment. The policy or practice in this regard also must not visit a disproportionate or unfavorable impact (even if unintentional) on any protected class, either, in order to be defensible from an adverse impact claim as well. For example, while a policy of providing a company vehicle to employees who live within a 30 mile radius of the office, for instance, may appear to be neutral, if it visits a disproportionate impact on a protected class (i.e. perhaps all techs living further than a 30 mile radius were female), then there is exposure to a discrimination claim. Thus, it is generally a best practice to implement a single policy regarding vehicle use/expense reimbursement and enforce it uniformly against all similarly situated employees. Keep in mind the importance of the "similarly situated" component, however, and in this regard a lower rated employee would not be similarly situated for this purpose to a manager, for example. To do otherwise, even if not unlawful, can still foster resentment or create other negative employee relations issues. That said, we should point out that the taxability of using a company car may implicate tax issues that are governed by the Internal Revenue Code and state tax law as well. If you provide a company car to employees (one, some or all), we recommend you consult with your local tax professional (i.e., accountant or tax attorney) for guidance on the appropriate tax treatment of a company car if you have not done so already. He or she will also be able to assist with drafting a policy that defines what constitutes "company use" as that is something to be determined by the individual employer as well as tax laws that may expressly dictate what is considered company use for tax purposes. As well, we recommend that the employer review is workers comp, general liability, and automobile insurance coverage plans as such plans may also provide specific definitions as to what constitutes "company use" that the employer may be obligated to abide by in its providing a company car to employees.
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