Having a company car isn’t all that uncommon. Allowing an employee to drive one, however, is a different story. While about many organizations have a company vehicle, only a small percentage let employees hop in the driver’s seat. Until now, you may have been in the same boat. Maybe you didn’t trust your team to drive safely, or you simply saw no need for them to have this privilege.
However, if your business could benefit from team members driving the company vehicle, you must set up rules and make sure your workers comply with them. Otherwise, you risk damages, injuries and irresponsible employees.
Establish Driver Prerequisites
Before making the rules, you’ll first need to determine who can drive your company vehicle. Obviously, the employee must have a valid driver’s license, but the other eligibility requirements are up to you. For instance, you may require they have a clean driving record for a certain number of years. Moreover, you may choose not to approve those who have driven under the influence of drugs or alcohol.
Once you establish a list of prerequisites, make sure everyone interested in driving the company car is aware of them. Then, those who believe they qualify may fill out and submit an application form. From there, you can review their driving records, conduct drug testing — if need be — and determine who is eligible.
Consider Accident Liability
Each year, about 3 million people sustain injuries from car accidents, so the odds of one of your employees crashing the company vehicle is relatively high. Your company may own the car, but who is liable for damages and injuries if an accident happens?
Typically, employers are responsible for employees’ actions on the job, including property damages and personal injury. Therefore, it’s best to protect yourself and employees by purchasing insurance coverage. In some situations, though, the employee may be responsible. For instance, if an accident occurs while driving for personal reasons or engaging in criminal activity, they will be liable for any damages or injuries.
Review Tax Rules
Inevitably, you’ll be making some type of tax deduction for the company car. How much you deduct depends on how your employees use the vehicle. If they log a lot of business miles, you could make a significant deduction. However, if they log more personal miles, you likely won’t deduct much. Therefore, it’s important to review all tax rules associated with company vehicle usage.
If you use the standard mileage rate, which is 58 cents per mile, you’ll likely receive a bigger deduction if the vehicle gets good gas mileage and is relatively efficient. On the other hand, if the car is expensive to operate and fill up, you may get a bigger deduction using the actual expenses method.
Log and Report Personal Use
Regardless of which method you choose, your employees will still have to keep a record of their personal and business use. Doing so will entail keeping a detailed log of how many miles they drove for work as opposed to how many they drove getting groceries and running other personal errands. In most cases, even the commute to the office will count toward personal use.
When tax season rolls around, you’ll have to report the amount of personal use using the above two methods or either the commuting valuation method or general valuation method. While these methods may result in varying deduction and reimbursement amounts, all of them require employees to keep a log of their miles, so don’t forget to make this a rule.
Outline Driver Obligations
Once you’ve considered liability costs and determined who can drive the vehicle, it’s time to make the rules. Outline driver obligations in your company’s policy handbook and make the new rules known to all current employees. You might also require those planning on driving to sign out a written agreement to obey all rules and driver obligations.
Rules may include no eating inside the car, no smoking and no unsafe driving. You might also require drivers to keep the vehicle clean and regularly take it to an auto shop for maintenance. If multiple employees will be driving the car, split responsibilities between them, so everyone accepts an equal amount of accountability. Moreover, you could create a checklist that each person has to complete each time they use the car, so you know who is cleaning it and who is shirking their responsibilities.
Driving Is a Privilege
For employees, driving the company car requires a fair amount of responsibility and character. From accurately and honestly logging miles to vacuuming the vehicle regularly, your team must prove themselves worthy of driving the automobile. Taking care of the company car will remind each one of your employees that driving it is a privilege, not a right. Anyone who doesn’t comply with the rules won’t be driving.
Enforcing the rules and checking employees’ logs and the car interior often will ensure they follow the rules and treat both you and the vehicle with the deserved respect.