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Company Vehicle Programs Verses Paying IRS Mileage To Employees

Nov 20, 2007
As more and more companies develop employee vehicle programs, it is important to understand the liabilities and benefits versus simply paying employee IRS mileage to drive their own personal vehicles, or use company cars. With the increase in the IRS mileage allowance, those companies who currently pay employees the IRS reimbursement rate for business miles are leaving money on the table relative to having a company vehicle program. And this is especially true for those with higher business mile drivers.

As we review the economics, putting drivers who travel more than 12,000 business miles a year in a company provided fuel efficient car or SUV, like a Chevy Impala or a smaller SUV, is a no-brainer relative to paying IRS mileage. But an important factor to consider is what your liability exposure from either method is, in regards to personal or business use of company vehicles. There are some interesting facts that most people may not be aware of when taking these decisions into consideration, and educating oneself on the history of cases and all current federal, state, and local laws is important.

Most businesses focus on the liability the company takes on when adding a company vehicle program. This makes sense, and is a common practice in order to try and evaluate potential risks for a company. For example, if an employee is driving a company vehicle for personal matters, and becomes involved in a personal injury accident where they were at fault, there is liability exposure there. And it is understandable that an employee's company would not want to be held accountable for damages incurred if said employee didn't follow specific rules and guidelines regarding company vehicle use. However, the largest liability damage awards in these cases, which are well into 7 figures, involved employees driving their own personal vehicles on company business, not company vehicles on personal business. So now the situation is reversed, and if the employee became involved in a personal injury or death accident where they were at fault, the company would then be held liable for a higher portion of damages.

So the facts speak for themselves in this case; larger liability exposure comes from allowing employees to drive personal vehicles on company business, and not the other way around. And sometimes driving a personal vehicle for company business is a common situation that can not be avoided easily, which will put a company at a greater liability risk. Evaluating risk is a tough decision for any individual or company, but paying IRS mileage in addition to covering personal injury liability becomes much more expensive than a well maintained company vehicle program. And there are ways to further reduce the costs of such programs, which makes them affordable for more businesses that most people are aware of. Especially in regards to leasing options, or using hybrid or alternative fuel cars and trucks, there are numerous options available when choosing a company vehicle program that is right for your business.

Copyright Flex for the Future
About the Author
Flex for the Future provides alternative fuel vehicle leasing of hybrid cars and biodiesel trucks to businesses.
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