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Manditory Company Policy On Company Cars

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susanfrommer

Junior Member
What is the name of your state? Hawaii

Dear Sir or Madam:

I worked for a privately-owned company that is a nationwide U.S. Government contractor. Since its inception in 1996, the company has paid its field employees mileage reimbursement for each employee to use their personal cars to conduct company business. Currently this rate is.405 per mile and is understood to include all vehicle costs such as car insurance, registration, gas, maintenance, repairs, etc...

The company has recently come under new management. In an effort to cut costs, management has researched whether or not the mileage reimbursement makes financial sense for the company. Based on their research they have decided to change this policy as it is costing the company too much money. Their new policy is to provide company cars, with the company paying for all vehicle-related expenses such as the ones mentioned above. They are making this policy manditory for all field employees. Each employee gets their choice of three models. Under this policy, the company is also making it manditory that each employee pay between $130 and $300 per month (after taxes) (depending on the car they choose) as a "modest monthly charge to cover personal use of the vehicle" (even if the employee chooses not to use the company car for personal use).
Every two years each employee will exchange this car for a new one. Despite paying the manditory monthly fee, the employee will have no stake in the ownership of this vehicle unless they opt to purchase the car at the end of the two years. However, if the employee does decide to buy the car, he/she would still get a new car and would still be required to pay the monthly personal usage fee for the new car.

Currently all field employees either own, are paying off, or are leasing their personal vehicles as it is a requirement of his/she employment to have reliable transportation to conduct company business.

This new policy poses a dilemma for each employee either: 1) the employee complies with the company policy which means having to pay the company between $1560 and $3600 per year for personal use of the company car (even if the employee chooses not to use the company car for personal use), in addition to also paying all of the expenses associated with keeping their personal vehicle, or 2) each employee chooses to sell their personal vehicle in order to eliminate the costs of having two vehicles for personal use.

The company has made it clear that they will not help any employee fulfill any existing personal financial contract/obligation, ie a car lease or a car loan. In addition to this, the company will not assist anyone who lives for example in an apartment building who only has one parking space, who under this policy may need to pay for another parking space for the company car.

Also, the company has made it clear that all employees must comply with all aspects of the new policy if they want to keep their job.

I believe and accept that the company can make it manditory for its employees to use company cars to conduct company business, however is it legal for the company to make the personal usage portion of this policy manditory?

Any insight would be greatly appreciated.

Mahalo and Aloha,

Susan
Edit/Delete Message
 


pattytx

Senior Member
The employer can "assume" the employee is using a company car for personal use and make the deduction, but it still must be authorized by the employee. However, if the employee produces mileage logs or other documentation that such assumed personal use was not, in fact, incurred, the employer should be refunding the applicable portion, or all, of the deduction.

Now, I'm pretty sure there are no "laws" surrounding this, it's just best payroll practices, which I AM aware of, having been in the payroll world for over 27 years.
 

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