Mileage Reimbursement
Crout
1,238 Posts
In order to manage our insurance costs, our insurance carrier mauntains an approved driver list for our employees. When we hire a new employee, we submit their driver information to the carrier. If their driving record is acceptable, they go on the list and are allowed to drive company venicles. We have recently decided to expand the Approved Driver List to employees who do not use company vehicles, but who submit mileage reimbursement when they use their own vehicles on company business. Here's the thing: If their drving record is poor they probably won't get on the Driver List, which means that we will NOT reimburse their mileage, even though we will still expect them to use their vehicles on company business if it's necessary. Can we expect fallout from this policy change and would the fallout be valid? Thank you kindly.
Comments
We turn names in to our insurance company of all drivers: Our CDL delivery drivers, managers etc. who drive company owned vehicles, AND sales employees who drive their own vehicles in the course of employment. We check the MVR of all of these every year, and anyone whose driving record fails to meet a set standard is removed from driving during employment. Sometimes this means they lose their job. They are told upon hire (sales employees included) that a good driving record is required.
What you actually do is up to your company, and of course might be affected by what your insurance company requires.
My recommendation is that you don't change the reimbursement policy, just deal with the driving record on its own accord. How will it look if an employee wrecks and kills someone, and you are sued because they had a bad driving record and you still employed them in a position that requires driving? The fact that you removed their mileage reimbursement would not help in your defense. For all driving positions (even personal vehicles) you need to consider negligence on the part of the company.
Secondly, we also submit drivers' info to our insurance company on those who are regularly expected to drive in the course of their duties. However, those who do drive, only occasionally, in their own automobiles, and who are not included on the driver list, are still reimbursed mileage. It's not a matter of legality - it's a matter of fairness. Why should an employee be penalized a benefit available to all other employees but for a few speeding tickets that are none of the company's business?
Here is the bottom line, you pay it or they claim it on their taxes. You pay, it is incomce and taxed. A perk tax at that. They claim on taxes, they get the standard reimbursement. Most company's do not pay above the reimbursement rate an ee can claim, so what harm is there. In actuality, they may come out ahead (for mileage). They can also claim the depeciation, wear and tear, etc. for business use. So, why is this not fair. It is more frsutrating for the ee because they have to have a complete record of the mileage. They have to show the starting and stopping mileage, wherethey traveled (I believe including the address), the nature of the trip, etc. But, they can still receive this "perk." Sure they will be mad, but you did not tell them to race and see who could make it to the levy first.
First, you will probably need to determine that all EEs inlcuded on your Approved Driver List have current drivers licenses. That will mean some sort of data base with expiration dates and a notice going out to remind them to give you a copy of thier renewed DL. You will also need a policy covering any changes that happen since the EE was last on the list - some sort of notification regarding points received and/or revocation of the DL. This is not rocket science as other companies surely do this, but just an added burden that someone takes on.
Second, be ready to prove that each approved driver is maintaining state required insurance - same issues as with the DL, but much more involved as insurance can be cancelled due to a number of factors, such as non-payment. This means a fairly big addition to the administrative task of insuring that each driver is carrying the insurance and that it is in full force. Notices, copies of insurance policies, notice of non-payment or other cancellation by the carrier, etc.
Third, be ready for the insurance underwriter to suggest the approved drivers carry more insurance than the state required minimum. Which, by the way, will start the clamor for reimbursement of the extra cost of insurance.
None of these is insurmountable, but just some of the factors that may follow your company's decision to expand the list.
The change should be incorporated is: If not on the approved insurance driver list they are not allowed to drive company nor personal vehicles in the accomplishment of COMPANY BUSINESS.
We run two approved driver's list 1) CDL drivers 2) other company vehicles & personal vehicles.
MVRs ARE RUN FOR ALL DRIVERS AND PERSONAL EXPENSE IS PAID FOR THOSE USING PERSONAL VEHICLES. Our insurance company requires the listing and the MVRs to add these employees to our list of insurable employees. We have an assessment of points for all sorts of listed discipline activities occuring on the MVR driving history regardless of the type of vehicle. At 12 points the driver is notified that he/she is placed on probation and we will run MVRs every 3 months.
At 13 points and above this person is removed from the insurable list and is no longer allowed to conduct company business which requires driving, regardless of vehicle owner. It is the driving record and history that is important to the underwriters. The fact that someone has 4 speeding tickets and 12 points under our insurable policy is an indicator of the greater risk that this person has over someone, like myself, who has not had a speeding since 1985. The insurable risk on me, as an employee driving is my age and individual medical status/condition.
I hope this will help you in your decision making process. Your insurance underwriters have the greater interest in the arena and they must be involved.
PORK
The one thing that I didn't hear anyone mention (and I may have missed it)... I am VERY surprised that your insurance company didn't REQUIRE every employee that drove their own car for company business to 1) require a minimum limit on their personal auto liability insurance and 2) require you to obtain a copy of this declaration page to verify the coverage that they actually have. (Then the company would be secondary... but could still be a large liability if something happened.) Normally what I have found is that insurance companies say that no more than 3 at fault violations and/or no DUI within the last 3 years.
How you pay your employees for the use of their personal car is up to you. However, if they are required to drive on company business and the insurance company will not cover you if they are under the wheel of a car (any car), you have a problem, unless they go out and hire a chauffeur or just ride with another company employee. If they can't do their job because they can't "call on customers" or whatever it is they do outside the office, they wouldn't be able to an essential part of the job and not able to continue employment (at least at a job the requires driving.)
E Wart
Brad Forrister
VP/Content
M. Lee Smith Publishers
E Wart