Ride Guide: Legal Aspects of Company Vehicles

Should staff use a company vehicle or their own?

An ongoing LinkedIn discussion has engaged a lot of remodelers over whether employees should drive company trucks or their own vehicles to jobs. The recession has answered the question for some — maintenance costs outweighing other factors — but others who are keeping their company trucks cite the importance of controlling their company image.

All agree that if you have a company truck it’s mandatory to keep it clean and in excellent shape — something that employees may have difficulty doing. There are also some legal aspects to consider.

Your Truck or Mine?

There are three issues you need to think about when deciding about truck use, says construction industry attorney D.S. Berenson: insurance; employee classification; and advertising and branding.

1. Insurance: Whether employees drive a company truck or their own vehicle, you need to be covered by an automobile policy that’s part of your commercial general liability insurance or a separate policy. “Make sure you have coverage for anything that goes wrong involving any automobile used in the scope of employment,” Berenson says.

2. Employee classification: As a general rule, an independent contractor should use his own vehicle, not your vehicle. You don’t want it to appear that he is a W-2 worker when he is actually a 1099 worker. Make sure you’re an “additional insured” on his policy.

3. Ads & branding: If you put advertising — say a magnetic sign or wrap — on your own vehicle, you must have certain disclosures on it, such as your contractor license number. You might put a sign on an independent contractor’s vehicle, but rules for that vary by state.

If using independent contractors, have a branding agreement with them that says you are asking the installer to put the sign on his car for consumer safety — you want clients to see that this person is legitimate and not be afraid when he shows up at their house. “The IRS will respect this consumer safety argument in a reclassification audit,” Berenson says.

Not having this memo could mean the loss of worker classification at the state level. The court might find that the worker is an employee rather than an independent contractor, for example, as per the rules in Massachusetts.

—Stacey Freed, senior editor, REMODELING.