In the last week the majority of states in the U.S. have either begun reopening or laid out a set of reopening phases. During the COVID-19 lock-down travel for nonessential businesses has been replaced by Zoom calls, phone calls, and other remote strategies for sales and client relations. Is now the time to send reps back out on the road?
COVID-19 Business Vehicle Travel Questions
With the economy in crisis, many business leaders, employees, and politicians are pushing to lift stay-at-home orders. As various states begin allowing nonessential businesses to resume operations, companies with reps who normally conduct face-to-face meetings with clients and prospective customers will face decisions of whether to resume these activities or continue with remote sales calls and meetings with clients.
The New York Times has created an interactive resource that tracks each state's latest reopening status for various activities. This could be a helpful resource to guide decision-making regarding employees operating in different parts of the country.
Many states are allowing golf courses to reopen. Does that mean golf with clients can resume? Many states are allowing restaurants to open outdoor dining spaces. Does that mean outdoor meetings may occur? Even if face-to-face meetings may resume, will your reps and customers be comfortable meeting at physical locations? Will trade shows and conventions that have been postponed be allowed to proceed under social-distancing guidelines?
The safest option for preventing the spread of COVID-19 is to continue keeping nonessential business operations remote. If an in-person meeting is necessary, it is advisable for participants to practice social distancing, including wearing masks. But couldn't this be awkward and negatively impact relationships? That probably depends on the individuals involved. Many organizations may just choose to continue remote meetings even if travel restrictions have been lifted.
Potential legal ramifications may also stop employers from encouraging or requiring employees to resume face-to-face meetings and business travel. Employees who feel pressure but consider it unsafe might decide to take legal action. This is a controversial issue that state legislators and members of Congress are debating. Consult your organization's legal counsel before taking steps in this direction.
Finally, if any employees resume business travel, it is vital to reevaluate your company's vehicle reimbursement policies to make sure they fit the current needs of employees and protect the organization as well.
3 Travel Reimbursement Questions to Consider
Now is a great time to review and update your organization's business vehicle reimbursement policy. Here are three questions to guide you through this process.
1. Can your car allowance or reimbursement fully cover your employees' costs?
Right now, gas prices are low, so it could be easy to think your current vehicle reimbursement policy will sufficiently cover employees' driving costs. However, there's more than just the cost of fuel to consider.
Two of the biggest sources of expense for vehicle owners are auto insurance and depreciation. Depreciation is an invisible expense but often constitutes 40 percent or more of the total annual cost of vehicle ownership. If you require employees to use personal vehicles to conduct their work, then this cost should be factored in.
To learn more about how to properly reimburse these costs, and why a typical mileage reimbursement program is poorly suited to the current needs of mobile employees, read Does Your Mileage Reimbursement Cover Auto Insurance and Depreciation?
2. Is your vehicle reimbursement policy customizable to different employees' needs?
With the country a patchwork of varying rules and regulations about travel versus staying at home, companies that decide to allow reps in some states to resume face-to-face meetings need to make sure that their reimbursement policy is flexible enough to account for a variety of employee situations.
But even when business travel again becomes the norm across the country, this need for customization will not go away – in fact, it is a necessary component of any effective reimbursement policy. This is because different employees face different costs depending on where they live and how much they drive.
Because gas prices, insurance rates, maintenance costs, and registration/license fees vary from state to state, two employees who travel roughly the same amount can incur widely different expense levels. Similarly, territory sizes also affect expense levels.
Both traditional car allowances and mileage reimbursement policies fail to deliver equitable reimbursements when employees face significant variations in costs. That will not change even if all employees resume normal business travel. To learn more about how to customize your vehicle reimbursement policy, read our Ultimate Guide to Fixed and Variable Rate Reimbursement.
3. Does your vehicle reimbursement policy protect your organization from litigation?
The two biggest sources of liability from employees driving vehicles for business purposes are car accidents and labor laws. You can help prevent employee car accidents by instituting a Driver Safety Policy. But it is also important to take proactive steps to prevent liability if an accident does occur.
The most important steps to preventing liability from accidents are to
- Require employees to maintain sufficient auto insurance coverage (we recommend setting coverage at 250/500/100)
- Verify employees' auto insurance coverage every six months
- Perform regular motor vehicle record checks on employee drivers and intervene if an employee's record shows an incident
The most important steps to preventing liability from state labor laws are to
- Familiarize yourself with employee-friendly states that have expense indemnification codes (most notably California's labor code 2802)
- Ensure that your vehicle reimbursement amounts are sufficient to cover all reasonable expenses related to business vehicle travel
Whether or not your organization currently has drivers on the road, now is a great time to reevaluate your business vehicle policies. With so much uncertainty about the future it is important to be proactive in supporting employees and protecting the company. Flexibility will be key.
To learn more about services mBurse offers to support your business vehicle policy, visit our professional services page. To take immediate action to update your vehicle reimbursement policy, select the image below.