Personal use of company-provided vehicles has long been a perk that many businesses provide to their employees.
In my business, one of the risk management controls that we check is the personal usage policy for company vehicles, one that limits usage and sets guidelines governing who can use the company vehicle.
But recently an increasing number of employees have been found to be using their company cars as a tool to generate supplemental personal income. This is not a completely new phenomenon, but coincidentally there appears to be a recent uptick in such activity with the creation of ridesharing services such as Uber and Lyft.
One of the fastest-growing trends in unauthorized usage of company vehicles recently have been using company vehicles to drive for Uber or Lyft. According to the Uber website, the vehicle being used does not have to be in their name but the driver must show proof of insurance, which can be altered or fabricated with enough ingenuity.
As risky as that may sound, it’s not beyond someone’s imagination. As a point of reference, I can recall working with a fellow risk control consultant who had questionable work habits and a tendency to disappear at times. Over time, management discovered this individual was running his family business, his own car wash and other family ventures utilizing his company vehicle, printer, fax, cellphone and office space.
As it turned out, his day job often took a backseat to his personal business, but it eventually caught up to him and he was terminated.
Over the years employees have been known to use their company vehicles to deliver pizzas, groceries, Amway or Avon supplies, move friends over the weekend or provide caregiving for elderly relatives. Some have even been known to lend their vehicles to their kids as well.
When my son delivered pizzas, the only requirement was to show registration and proof insurance, but no one checked what vehicle he drove on any given day.
Service technicians, landscapers, plumbers, heating and air specialists, cable installers …etc. have all been known to use company trucks and vans to moonlight for their personal business after hours. Some even return to offer to competitive services for a lower price or for cash on their own time.
In addition to the increase in wear and tear on company vehicles, this also depreciates the value of the vehicle due to the extra mileage. More importantly such actions increase liability for the employer when it comes to “negligent entrustment exposure,” not to mention the negative impact on brand image with potential customers.
The best method for employers to address the issue of unauthorized vehicle usage is to develop a specific clear policy. It should permit and define personal miles as “reasonable and incidental,” and prohibit livery service making such use cause for immediate termination.
A good employee usage policy should prohibit loaning the vehicle to unauthorized users, hiring it out to others, using it in any livery operations, or any other enterprise not approved by the company. To add more teeth, I have seen companies go as far as prohibiting attaching equipment such of snowplows, winches, or luggage carriers for personal business, as well as banning towing of trailers, boats, jet skis and campers. When writing a personal usage policy that lists prohibited usage, I would further recommend inserting the qualifying phrase “including, but not limited to” to help keep the attorneys happy.
Employers should stress to employees that they will be held accountable for violation of the personal usage policy and will face consequences for unauthorized use of company vehicles. Because different policy violations may call for different consequences, human resources professionals claim that you shouldn’t be too specific unless it’s required.
For example, fleet policy can simply state, “Unauthorized personal use of a company vehicle may result in loss of vehicle privileges, or more serious discipline up to and including discharge.”
It’s important that all company drivers should sign a statement that acknowledges that they have read the employee usage policy and agree to follow company policy.
In an article at automotivefleet.com, it’s suggested that to better safeguard the fleet policy is to reduce respondent superior liability. The term “respondent superior” is a legal concept that, in this context, essentially states, “As long as an employee is using a company vehicle to perform work for the company, the company can be held responsible if the employee gets into an accident with that vehicle.”
Therefore, if policy prohibits employees from using vehicles for specific types of personal use, and, for example, an employee gets into an accident while moonlighting, a company can use this fleet policy rule to argue it is not liable for the accident.
It’s not the employer’s duty to block the employee from obtaining secondary employment, and such action is typically not legal. Instead, employers should focus their attention on areas of legitimate business concern when addressing the matter of outside employment and instead consider developing a conflict of interest policy that is applicable.
It should prevent the personal use of company-provided vehicles for personal gain or non-company related endeavors.
No fleet policy can be 100 percent successful in preventing employees from abusing personal use privileges, because a policy is simply nothing more than just a collection of words. It does inform employees of the consequences of breaking company policy and helps employees stay between the lines.
Fleet safety policies are crucial to operating a well-managed program and are the first thing underwriters request when evaluating the risk exposure to insure your business.
Any good fleet safety manager will tell you that you need to not only communicate fleet policy to employees, but, more importantly, you need to re-communicate it to your drivers regularly. When it comes to fleet policy, there is no such thing as being redundant.
Insurance follows the vehicle so regardless of the most specific vehicle usage policy written by the best team of lawyers money can buy, the risk still remains. If there is an incident involving your company vehicle, the employer will be on the hook for any damages or liability resulting from the use of that vehicle.
In today’s litigious society, the employer is always viewed as having deeper pockets with higher limits of liability to chase after. By developing a formal and inclusive employee usage policy in combination with a sound fleet safety program — which includes driver training — you better manage your risk exposure, and it should help reduce the amount punitive damages an attorney may try to seek.
Be Safe My Friends.
Keven Moore works in risk management services. He has a bachelor’s degree from University of Kentucky, a master’s from Eastern Kentucky University and 25-plus years of experience in the safety and insurance profession. He lives in Lexington with his family and works out of both the Lexington and Northern Kentucky offices. Keven can be reached at kmoore@roeding.com.
