An employee states that he needed to replace his car's shocks due to constantly transporting materials to various events often. Due to this he's looking for us to pay for the parts. Is this company responsible? The car is older and we know he has many other non work activity that he uses his vehicle to handle.
Should the company pay for vehicle repairs?
Answers
It depends.
How long has he been with you? How often does he transport materials? Was it agreed upon him using his vehicle? Do you pay him mileage or some other subsidy for using his vehicle?
I would say it is up to your discretion.
If the company reimburses the employee for the use of the car, the cost of all such repairs are included in the mileage allowance.
I agree with Scott and would note that if you are reimbursing mileage at the IRS rate, repairs and maintenance are included in that allowance meaning you should not pay the IRS mileage allowance and pay for repairs.
I agree with James and Lyle. Repairs are included if you reimburse at the IRS safehabor rate (national average) or under an IRS compliant FAVR (fixed and variable rate) program.
I will approach this from a different perspective. What you decide (whether to reimburse or pay for the repairs or not) reflects the ethical standards of the company. I will go further than the rest of the comments so far....even if you are paying the IRS rate (the rate that includes repairs), the convenience and affordability it affords the company should still weigh in. Having said that....you could just as easily rent a 19.99 UHaul for the day plus mileage and call it a day.
I try to keep things separate (whenever possible) and try not to have even a perception that I am using or taking advantage of an employee. This includes among others use of their personal credit cards (even with reimbursements), personal phones, personal digital gadgets...etc. But that is just me.
Emerson's response is spot on. Don't get too caught up in the technical definition of mileage reimbursement if it means creating an unhappy employee out of someone who offered his personal vehicle for company use.
IF the company is paying the employee to travel, some sort of reimbursement plan 'should' be in the company's policy, i.e. accountable plan.
Looks like the company does not provide a company car but 'makes' the employee use his/her own car.
Agree with Emerson!
What is the company's obligation to reimbursement? Ethics?
Set up some sort of a auto reimbursement plan as it doesn't necessarily have to be the IRS rate as some commenters have made as many companies have their method of reimbursement.
Alert the employee if any reimbursements may be added to his taxable compensation.
Dealing with reimbursement and playing around with an employee's compensation give the sense of the company's ethics!
A couple of thoughts immediately spring to this
1) What you do for one, you must do for others. Do you want to set this precedent?
2) Liability-
3) Taxability: I can't see this being a non-taxable event. There's no way around it.
I could see making a one time payment on this under some of the conditions cited by others here. But then setting down a policy regarding transportation on company business - be that use of personal auto, company provided vehicle, whatever - so that there is clear understanding and boundaries in place between personal and corporate going forward.
It's often easy to waive such idiosyncratic events off as "no big deal".....until it is. Then, it hits the fan. Then the usual response is, "I didn't realize that.".
If you are paying the Federal standard mileage rate then any reimbursement for repairs is considered taxable compensation.
I agree with the Federal Mileage Rate statements. That reimbursement is meant to cover fuel and maintenance for company use of the vehicle.
He must be transporting a considerable amount of weight for this to even have any impact on his vehicle at all. I would be hesitant to simply pay for his new shocks, but if you agree that the weight being transported is excessive, consider an additional reimbursement per mile based on weight transported, or think seriously about an alternative method of transporting these products, such as having them use a company-owned vehicle instead.
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