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When Providing Company Vehicles, Addressing These Legal Issues Is Key

When Providing Company Vehicles, Addressing These Legal Issues Is Key
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This story appears in the February 2016 issue of Entrepreneur. Subscribe »

Q: What legal issues do I need to address when providing company vehicles for my employees? 

A: Keith Ashmus, a Cleveland lawyer and a former chairman of the National Small Business Association, suggests covering these three bases:

  • Liability. “Make sure you have the right insurance coverage,” Asthmus says. When talking with providers, explore liability issues both for your employees (should one claim you provided a defective vehicle) and for third parties (should the employee get into an accident). 
  • Taxes. Is the employee entitled to drive the vehicle for personal use? If so, Ashmus says, the employee might be responsible for paying taxes on it. Check with your accountant and your lawyer.
  • Compensation. Be clear about the terms of use. For example, is the employee responsible for vehicle maintainence? One solution is to provide company cars only to employees classified as exempt; that is, salaried employees who, under law, are not eligible for overtime -- or compensation for time spent fixing the car.

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