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From Nafa Article
NAFA's Guide to Fleet Vehicle Policy Development
This is the current working draft of NAFA's new book on fleet policy development. All changes and additions must be made before March 1, 2007, when this forum will be closed and the draft will be sent to the editorial committee. Please log in to contribute or create a user name for yourself by clicking the link in the upper-right of this page.
Introduction to Fleet Vehicle Policy Development
• This guide will provide a unique insight and assist the user with a multidimensional understanding of vehicle policies, their development and caveats associated with situations that may not have been considered at the time of inception. While some of the questions posed may appear to be extreme in nature, they nonetheless illustrate real situations that have and will continue to occur in real world applications. It is vital that the fleet manager, whether reviewing existing policy or developing new ones, be cognizant of questions and consequences that need to be fully understood prior to implementation.
Overview of Fleet Policies & Procedures
• As policies may be specific to particular vehicles and applications, so too, may they be specific to the company or government agency that is responsible for the vehicle. Many times two different fleet managers will develop the same policy but they are expressed in completely different ways. This may be a result of the style of the writer and as much if not more so the desire to blend the essence of the message to mirror existing company or agency policy in structure and tenor. This guide will not provide instruction on how to write policies and procedures, but rather is will provide suggestions which will enable the fleet manager to construct clear and effective communication. When establishing a new policy or procedure the fleet manger may realize an advantage to concentrate first on the substance, expressing the message clearly, then to craft it into the profile of other communication that is in place with the Company. In this method the fleet manager concentrates on the substance first and then integrates the communication into a style consistent with other company or agency communication. After reviewing this guide, the fleet manager may realize that there may be significant opportunities to protect the safety and well being of the employee, the company and the equipment.
Eligibility for Company Car/Vehicle
Eligibility for Company Car/Vehicle • The eligibility for a Company vehicle may be predicated by a variety of reasons including but not limited to:
Need based. The vehicle is assigned to a driver because it is an integral tool in the performance of their job. This may include a sales representative, a technician who may be on call after hours, a specialized or officer of rank, or other such scenario. This may or may not provide for take home privileges. Non-need based. This is typically reflective of senior management or special performance-based recognition in which the vehicle is not an integral part of that person's job requirements. In this instance the type, cost, level of equipment and term of eligibility may vary widely from company to company. Prior to implementing new policy in this area, The fleet manager will eliminate a significant amount of angst to ensure senior management has reached an absolute consensus regarding the specifics of and potential loss of eligibility.
Use of a Personally Owned Vehicle
Use of a Personally Owned Vehicle • Will the use of a personal vehicle be authorized and compensated for to make occasional business specific errands ? Will a personal vehicle be used each day to go to the post office box before arriving at the corporate office each morning ? While these examples may be at the extreme end of the spectrum, these scenarios clearly exist. If a crash or loss were to occur have expectations been clearly spelled out and understood ? Have the following concerns been addressed :
Does the employee understand that they will need to notify their automobile insurance carrier of the frequency or annual work related mileage which may result in a raise in their insurance premium ? Has your company established minimum insurance levels which may be significantly higher than that of which the employee would typically have in force ? Does the employee understand that regardless of a flat rate or per mile compensation, they will be responsible for all maintenance, repairs and losses due to crashes and other occurrences ? Has your company established minimum standards regarding the exterior and mechanical condition of a personal vehicle used for business purposes ? As one can well imagine, given the nature of the position and many other factors this point is akin to the dress code of a specific company and the clients that they interact with on a routine basis. How will this be enforced ? If the employee's vehicle experiences downtime due to significant repair, does the employee understand that they will need to bear the cost of a rental vehicle regardless of their compensation ?
Authorized Cars/Vehicles & Optional Driver-Paid Equipment
Authorized Cars/Vehicles & Optional Driver-Paid Equipment • Similar to who is eligible for a company vehicle, The breadth and depth of vehicles and optional equipment can quickly be daunting unless controls are established.
Who can, and specifically who cannot drive a company vehicle ? Are there exceptions and how are they addressed ? If an employee is assigned a vehicle and it is taken home and parked in the driveway Friday evening, Saturday morning the employee's son with a valid drivers license wants to shoot basketball in the driveway and moves the car and backs into the neighbor's mailbox, what are the consequences ? Can the spouse of the employee use the vehicle to make a quick run to the store ? Is the employee allowed to take the vehicle on a vacation with his family ? Is he required to pay the company mileage for personal use ? If the answer is yes (according to clear IRS guidelines) who manages this process and makes the payroll deductions ? Does the Company or agency have a selector list of multiple vehicles or different trim levels based on specific criteria ? Are driver paid options or upgrades allowed ? If a driver pays for an upgraded stereo and sunroof and is either demoted, fired or losses their license two months after receiving the vehicle, how will this be handled ? Are the cost of driver paid options collected in full prior to the vehicle order being placed ? Was an agreement signed ? Is a driver allowed to install items such as a trailer hitch, roof luggage rack, dark tinted windows or bodyside moldings ? Are vehicles allowed to have bumper stickers, license frames, after market fog lights, remote starters or other equipment ? If this is allowed are the employees free to install items themselves which may possibly involve electrical connections or drilling into surfaces ?
New Car/Vehicle Delivery
New Car/Vehicle Delivery • When a new vehicle is ready for pickup at the dealer, or is delivered directly to the driver by other means, is the driver expected to perform the following activities ?
Perform a walk-around inspection of the vehicle and ensure that it does not have any damage and all optional equipment is in place and functional ? What is the chain of communication if discrepancies are identified ? Will the driver need to register the vehicle or perform an activity to assist with the registration process ? Are all parties clear what expectations are ? How and when is the driver to advise the fleet manager that the new vehicle is on road ? This may impact insurance coverage, billing, and or warranty start dates for both the vehicle and any upfitting. This may also trigger a “watch clock” on license and registration activities and internal accrual for accounting purposes.
Car/Vehicle Replacement
Car/Vehicle Replacement • Vehicle replacements may be decided by one or more of the following factors: mileage, age, mechanical or cosmetic conditions, suitability for a particular purpose or application, promotion or demotion, accident or other factors. The fleet manager may initiate some replacements while other replacements are communicated to the fleet manager by other members of the organization. Are replacement parameters clear and understood by all parties ?
Disposition of Used/Pre-Owned Car/Vehicle
Disposition of Used/Pre-Owned Car/Vehicle • Most fleet managers understand that leveraging various remarketing channels may provide for increased residual value and, if employee sales are allowed may provide for enhanced employee relations and lower maintenance due to the fact that the driver usually takes better care of the vehicle if they have an opportunity to purchase at termination.
Are employee sales allowed ad if so is it open to all employees or just the driver ? How is the selling price determined ? Are all monies collected up front and are taxes fully understood by employees ? Are any warranties provided or expected ? What assumptions are made and by whom ? If employee sales are not allowed or no one is interested then what is the best remarketing channel ? When are vehicles to be turned in and when ? Are signed receipts required ? If employee sales are allowed, are safeguards in place to prevent or detect potential "packing" of repairs or maintenance items. An example would be the vehicle had all tires and brakes replaced 10,000 miles ago but prior to the employee sale they were replaced again. The sale of vehicles should be contingent of "as is - where is" Significant prior repairs may require a vehicle cost adjustment. The same may be regarded for recently found body damage.
Personal use of a Company Car/Vehicle
Personal use of a Company Car/Vehicle • Personal use of a Company or Agency vehicle may be predicated on many factors including but not limited to the following:
No use other than strictly business purposes. This is typical of specialty use and purpose-built vehicles such as emergency vehicles, Upfit and specialty trucks and vans and the like. Typically these vehicles have no other purpose other than the task that they were specifically designed to perform and often carry Company inventory, tools or equipment. Limited use by the employee that the vehicle is assigned to. This may include transporting immediate or household family members for a limited nature or duration. Unlimited personal use by the employee. This may include use of the vehicle for vacation purposes. Limited or unlimited personal use by employee and their spouse/partner or immediate household members. • If a Company vehicle is not allowed for use of any kind outside of the scope of work are the specifics clearly spelled out? • If limited use is allowed, are the following items specifically addressed: The number of passengers must not exceed the number of factory installed lap/shoulder and each passenger must properly wear the devices. No cargo may be carried on or within the vehicle unless the vehicle is specifically designed and equipped to do so. If personal cargo is to be transported it must be adequately secured to eliminate the possibility the load shifting, possibly injuring the operator, other passengers or creating a hazard. It must be stated clearly that the vehicle is a Company / Agency asset which is designed to further the goals of the company or Agency. As such it is not intended to serve the personal needs of the operator. Are trailer hitches, aftermarket luggage racks or other similar equipment allowed ? If personal use includes vacation or similar purposes, is the employee required to reimburse the Company or Agency for personal mileage ? If so at what rate ? If use is allowed by members of the household other than the employee, are there hours of use, age, and licensing considerations ? Will MVR's be required on those individuals ? If an employee incurs a short or long term disability, up to and including participation in the FMLA program, do they still retain the assignment of the Company vehicle ? Personal use rates are handled in several different manners. While few Companies do not require any driver reimbursement, other companies may charge a flat rate per week or month. In this instance a set amount such as $20-$50 per month may be charged by the company to cover the privilege of "occasional personal use". This scenario is typically a nominal amount which takes into consideration inevitable personal use with no bookkeeping. The majority of Companies rely on a structured Personal / Business mileage reporting program whereby the operator provides a report of all personal and business mileage each month. This is promulgated by IRS and Canadian Government regulations. For guidance of US based companies reference <www. IRS.gov> and search for publication 15-B Although the IRS provides several methods of accountability, The essence of the program states that Personal mileage is defined as any personal use of the vehicle such as commutes, vacations personal errands, or any use during short term disability. Personal use of a Company vehicle is included as taxable income on the employee's W-2 utilizing IRS formulas which may be adjusted from time to time. Additional important information relating to company vehicle and employee provided transportation related compensation scenarios and formulas may be found in publication 15-B and also <http://ecfr.gpoaccess.gov > search <title 26> then select <1.61 - 1.169> Need Canadian specifics.
Preventive Maintenance, Repairs & Warranty
Preventive Maintenance, Repairs & Warranty • Maintenance and repairs of company or agency vehicles is required to varying degrees depending on a variety of factors. Typically the frequency will depend on the manufacture's recommendations and any adjustments based off of time, application or special circumstances. Understanding that maintenance and repairs are one to the three leading cost categories (behind depreciation and fuel) of vehicle operations, excessive operating costs may be quickly realized by either too much or too little maintenance and subsequent repairs. Additionally, when less than prescribed or substandard mechanical attention is applied to a vehicle it may result in significant risk exposure, Company or Agency image and employee satisfaction and retention. • Significant opportunities may be lost when vehicle operators are unaware of the specifics and term of the warranties that may cover their vehicle. Manufacturer's warranties may change from year and from model to model. Therefore it is imperative that at the first notice of any concern with the vehicle, the operator advises either the company or person responsible for vehicle maintenance. Are vehicle operators and their supervisors clear on the time and or mileage intervals that apply to individual vehicles ? Do vehicle operators know where to take their vehicle for maintenance and repairs and what instruments (maintenance card) need to be used ? Does the repair facility need to request authorizations for repairs if over a specific dollar amount ? Is s the vehicle operator able to request repairs or maintenance that are not authorized ? How are conflicts resolved ? What are expectations for adherence to maintenance guidelines ? What steps are taken by management to monitor compliance ? Is there a progressive discipline which will escalate non compliance issues ? Are all parties clear on conditions of the base manufacturer's warranty and any extended warranties that may be applicable to specific vehicles ? Does the truck, trailer or equipment require annual Safety inspections as regulated by the DOT or other Agencies? What is the frequency and where are the documents to be retained? Who is responsible for subsequent ongoing inspections?
