Company Car Driving Guidelines
Common rules that companies must comply with when implementing company vehicle policies include:
1. Company vehicle policies must specify who is permitted to drive company vehicles and under what circumstances.
2. You may drive a company vehicle if you are a full-time employee or a verified volunteer of the company (if the company allows volunteers to use company vehicles).
3 . If your company provides vehicles for employees to use and employees drive them as a part of their assigned job responsibilities, such as using trucks for deliveries, then you are considered to be performing work for that period and not taking it home with you. Therefore, you should be permitted to use the vehicle for business use when you need it.
4. If your company provides vehicles to employees to take home but not drive on company time, such as sales representatives, drivers for on-demand services, or bike messengers, you typically may use the vehicle for business or personal use for as long as you remain employed.
Company Car Insurance Coverage
Companies are not only responsible for supplying safe vehicles to employees but they must also ensure that these vehicles have the proper insurance cover in place to protect not only the company but the employee. Many employers will place employees in harm’s way down the road if they fail to provide the correct insurance coverage. There are no exceptions to these insurance requirements; the law is the law. The only questions become what do you need and how do you get it?
In the Commonwealth of Virginia, company cars, trucks, tractors, trailers, welding trucks, service vehicles, contractor tools and equipment and all other property shall be covered under a filing with the Virginia Bureau of Insurance called a "Certificate of Insurance." This filing notifies the state and law enforcement that the vehicle insurance policy has been filed with the state and that an insurance policy on the vehicle(s) is in place.
The Certificate of Insurance will name the insurance company insuring the vehicles, the policy number, the date the policy becomes effective, and the date it expires. It will also include the name of the owner of the vehicle and the make and model of the car, truck, trailer, tractor, or other equipment.
It should be noted that insurances policies must noted within 15 days after termination or lapse of any insurance on a Certificate of Insurance. It is not a bad idea to ask your insurance company if these notifications are being made so you can have some confidence that the law is being followed.
Next week I will explain who is responsible for injuries caused by an accident involving a company vehicle.
Responsibility and Liability for Employees
Employers have the right to terminate an employee because he/she was driving a company vehicle when he/she committed an offense, be it on the criminal side or a violation of company policy. However, the employer must do it the right way. As explained in Cudnik v. Deutsche Bank, 2008 WL 2760542 (M.D.Pa. 2008), where a male employee (Cudnik) claimed that he was part of a class of employees that was terminated for violating the Policy but only female employees were given the opportunity to resign, the employer must ensure that its policy is enforced uniformly and fairly. Otherwise, employees may allege disparate impact and disparate treatment claims. Moreover, the employer may be found liable if it does not have a policy that establishes rules that govern the usage of the employee’s vehicle and the personal liabilities associated therewith, ensure its enforcement, and monitor any areas in its policy that might be violated or neglected, as was found in Howard v. Blue Crest Capital, Inc., 2013 WL 574725 (D.N.J. 2013).
It is every employee’s responsibility while driving a company vehicle to follow all traffic laws and/or company policies and to report any violation, accident, damage or repairs in a timely manner.
Authorized Use and Restrictions
As discussed above, employer-owned vehicles can be a significant form of compensation, particularly where employees work in a job where taking public transit to get to work may simply not be a realistic possibility. For example, an employee who lives on the outskirts of the city and has a fleet of clients to visit may need a vehicle to fulfil his/her employment obligations. Such an obligation is separate from the ability to drive a car to the office only, where for example, the parking lot is full other than for the owner’s parking space.
Common provisions that you may find in a company vehicle policy include restrictions to only allow certain employees (e.g. managers or executives) the right to take a company vehicle home overnight. However, if an employee does not hold this right, he/she may be disciplined if he/she takes a company vehicle home overnight. In addition, other restrictions may be put in place, such as the number of nights an employee is permitted to drive the vehicle home (e.g. up to 2 times per week). Further, some employers permit the vehicle to be used for personal use while others restrict use for business purposes only. An employer may also impose restrictions to the geographical area where the company-owned vehicle can travel. For example, a company may only permit its employees who live in a certain city or area be permitted to drive the company-owned vehicle home. Employees who do not live within the stipulated area, have been known to be asked to self-report to the office every day. Certain policies even permit use of the vehicle solely during the workday, and generally contemplate that employees will return the vehicle to the office at the end of every day .
It is also reasonable for employers to restrict the amount of employees permitted to drive company vehicles. For example, there is no reason why a part-time sales person who works only 5 hours per day, twice per week, should be given a company vehicle for that time-short period. Indeed, reasonable geographical restrictions, such as limiting employees to the city in which they live, are not unreasonable. Overall, the employer has the right to make reasonable restrictions on the use of their assets, including their company vehicle.
If the employee does not comply with the policy, he/she will be subject to discipline. Common disciplines/employer responses to an employee who misuses or is caught driving a company owned vehicle without permission, include termination of employment (usually for cause), revocation of the right to drive the company vehicle (or any company vehicle) and/or return of the vehicle for business use only. Other employer responses, in certain circumstances, may be education, a warning or other discipline less severe than termination.
Ultimately, by employees misusing or improperly using a vehicle provided by an employer, the employee is causing the business to suffer loss (i.e. repair costs). Employees must also not drive the company owned vehicle so as to expose the company to liability. This could mean, for example, that the employee disobeys traffic laws and causes an accident, or causes damage to the vehicle such that the vehicle must be repaired at the cost of the employer, or the employee drives outside of the geographical restrictions and leaves the company exposed; all of which open the door to liability of the employer, from the respective third party and/or reputational damage respectively.
Maintenance and Safety Requirements
Employers have an obligation to ensure that the vehicles they provide are safe and roadworthy. If a vehicle is not safe or is in need of repair, then the vehicle must be repaired. The employee that drives the vehicle has an obligation to notify their employer if the vehicle is in need of repair or maintenance. Depending on the status of the employer with respect to the business, if the employer is a corporation – a director may be personally liable for negligence if the corporation fails to maintain the fleet of vehicles in a safe condition. If the employer is registered as a partnership, partners can be personally liable. If the employer is a sole proprietorship, the sole proprietor can also be personally liable.
If the employee fails to report unsafe conditions, and the employer has not knowledge or ought not to have knowledge of the unsafe condition then the employee may be assessed the liability for negligence if their use of the vehicle is found to be negligent – would a reasonable person use the vehicle in that condition?
Legal Implications of Non-Compliance
The repercussions of non-compliance are swift and severe and can range from small fines to large compensation claims. The law relating to the use of vehicle in the course of employment is heavily tied up with issues of criminal liability, so that the consequences will vary depending on the facts of each case. Criminal liability arises from an offence being committed stated in a statute, with either an effort having been made by Parliament to mimic a common law offence, or the statutory offence being a completely new offence (to whom, if anyone can be attached criminal liability).
However, criminal liability often rarely arises in the realm of companies as when it is present, the likelihood is that a director or manager will be liable instead. What then happens to the company? In terms of civil liability, there is the risk that a company could be found liable and be ordered to pay damages to a worker or another third party. If a worker’s contract states that they should not be using a company vehicle, and they use their own instead, damage that occurs will be outside of the scope of their employment. Alternatively, if they would not be using a company vehicle at all, the company may be liable for their actions, unless a specific exclusion applies.
A conducive example would be where the company has a policy that states that workers should not use their phones while driving, and a worker is involved in an accident with another vehicle while using their phone. A worker, or any other person injured in this hypothetical circumstance , could claim against both the worker and the employer. In either case, the substantive issue is whether the actions during the driving were unreasonable, and there is nothing about the driver using their phone that is unreasonable per se.
A further example would be if the worker was in their own car, but the worker’s child was travelling with them. Say for example, that they were involved in an accident, and the child was injured. The suitability of the seat belt that the child was wearing would be material in determining why the damage they suffered was unreasonable. The question would be whether the seat belt would have prevented the child’s injury had the worker been abiding by the rules set by the company.
This only deals with liability and compensation. When criminal liability is at stake, the offence will depend on the purpose of the vehicle and on the actions of the driver. Reckless driving may carry a sentence of up to 6 months imprisonment for a first offence, but may be higher than this if someone is killed or injured. This will not apply if the vehicle is owned by the company, as penal sentences typically apply to accidents involving cars owned by the company. Drivers could be fined between £100 and £200. However, if the company accepts or encourages behaviour which could lead to a criminal offence being committed, then the fine will be increased.
Repercussions for the worker and the company will therefore be determined by the severity of the offence.