Key Takeaways

  • Work-related car use involves using a car for tasks like client meetings, deliveries, and company errands. Many employers reimburse or provide alternatives, such as company cars.

  • A well-written personal vehicle use policy can help clarify liability, set rules for reimbursement, specify insurance needs, and detail incident reporting procedures.

  • Employers should confirm employees have valid auto insurance with coverage for commercial use when driving for the employer, as most personal insurance policies exclude ‘for hire’ use.

  • Non-owned auto liability insurance can provide secondary coverage if an employee’s coverage is inadequate to pay for bodily injury and property damage.

  • The standard mileage rate deduction or actual expenses may be used for business use of a vehicle, whichever is more advantageous.

Using a personal vehicle for work means using your own car for business purposes. You may do this for employment-related tasks. If this happens regularly enough, your manager may reimburse your vehicle costs or provide a company car or truck for your use. 

This article will discuss important considerations when using a personal vehicle for work, whether you can refuse to use your car for work, creating a personal vehicle for work policy, and other using personal vehicle for work law topics.

Can I Refuse to Use My Personal Car for Work?

It depends on your employment contract. If you signed an agreement to use your personal vehicle for work-related tasks, refusing to do so could be a breach of contract.  

However, if your contract does not require using your personal vehicle, you might have more room to refuse. 

According to the U.S. Chamber of Commerce, employers can require employees to use a personal vehicle for work. This is often considered safer than providing company cars; however, it does put employees at risk of vicarious liability.  

This means you could be liable for illegal activities employees engage in while working for you. Reimbursing employees for using their personal vehicles for work can also be complicated. 

If your boss asks you to use your car without reimbursement, that might be a good place to draw the line. Many states’ labor laws say your employer must reimburse you for using your car at work if they ask you to do so.  

If you aren’t reimbursed, you might be within your rights to decline: most state labor laws say it’s unfair to make your employees bear that cost. 

Moreover, employers should consider an alternative, such as a company car or expense reimbursement, to avoid legal issues. Workers are protected against unreasonable or unsafe obligations outside their contractual duties.  

Refusing to use a private vehicle can be a legally valid excuse if there is no reimbursement or the task falls outside the agreed-upon scope. If you are unsure, consult a labor rights expert.

Using Personal Vehicle for Work Law: Employer Liability

Employers whose employees regularly drive personal vehicles for work should pay close attention to cases like Moradi v. Marsh USA, Inc.  

In this instance, the insurance brokerage Marsh USA, Inc. required its employee, an insurance sales representative, to use her personal vehicle throughout her workday for tasks like meeting clients, attending training sessions, pursuing sales leads, and transporting colleagues. 

During her commute home, the employee made a stop for a personal errand—to get yogurt and attend a yoga class—when she collided with a motorcyclist, causing severe injuries.  

The injured motorcyclist sued both the employee and Marsh USA, asserting that the employer should bear liability.  

The California Appellate Court ruled that the employer could indeed be held responsible. It stated the employer’s requirement that the employee use her vehicle for work-related travel meant she was still within her employment scope at the time of the accident.

Implications of the "Required Vehicle" Exception

The Court emphasized that, even though the employee made personal stops, her driving provided an "incidental benefit" to her employer. 

Under the "required vehicle" exception to the “going and coming” rule, employees required to use their vehicle for company purposes are considered within their work scope, making the doctrine of respondeat superior applicable.

Practical Recommendations to Minimize Liability

In light of this ruling, California employers should consider the following practices to mitigate liability exposure:

  1. Verify Employee Auto Insurance Coverage: Employers may request a copy of the employee’s auto insurance declaration page each year to confirm sufficient coverage for work-related vehicle use.

  2. Establish an “Individual Vehicle Use” Policy: This policy should clarify the circumstances under which personal vehicles may be used for work and allow the employer to revoke this privilege if needed.

  3. Disclaim Responsibility for Specific Violations: Clearly state that the employer will not be liable for any damages, tickets, equipment citations, or moving violations an employee incurs while driving for work.

  4. Avoid Requiring Personal Vehicle Use as an Essential Job Function: If possible, avoid listing personal vehicle availability as an essential job function on job descriptions, which could increase liability risk under the "required vehicle" exception.

  5. Limit Authorized Drivers: Employers may limit the number of employees required to use personal vehicles, minimizing the number of potential liability cases.

  6. Require Written Permission: For added precaution, employers can mandate that employees seek written authorization before using a personal vehicle for company business.

By implementing such policies, California employers may better manage liability risks associated with personal vehicle use in the workplace, reducing exposure while supporting employees’ mobility needs for company tasks.

Reimbursement for Using Personal Vehicle for Work

Most businesses that reimburse when they expect you to drive your own vehicle at work do so based on Internal Revenue Service standard mileage reimbursement rates. The standard mileage rate is a measure of cash for every mile that is charge deductible.  

As of 2024, this rate is 64 cents per mile, a 1.5-cent increase from 2023. If a business pays less than the standard rate, you can deduct the unreimbursed segment of the standard rate on your expense form. 

Notably, these rates are considered optional. The IRS explains: 

“Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates. 

Taxpayers can use the standard mileage rate but generally must opt to use it in the first year the car is available for business use. Then, in later years, they can choose either the standard mileage rate or actual expenses. 

Leased vehicles must use the standard mileage rate method for the entire lease period (including renewals) if the standard mileage rate is chosen.”

Creating a Personal Vehicle Use for Work Policy

Creating a clear Personal Vehicle Use for Work Policy gives business owners more control over liability, the level of compensation for travel, and employee responsibilities.

This policy should outline expectations and protections for both the employer and the employee. 

Below are vital sections to include when creating this policy.

1. Employer Liability

Start with a provision explicitly explaining employer liability for driving an employee’s vehicle for work-related purposes. 

Specify that, even when using their own vehicle, the employee must follow all company standards for vehicle use, including driving laws, to avoid exposing the company to unnecessary risk. 

2. Reimbursement Rates

Ensure this includes a reimbursement section based on your area's federal or equivalent mileage rate.

Decide what trips employees can expense (e.g., client visits and other business trips) and determine a procedure for them to submit mileage or fuel expense reports.

This regular reimbursement also helps keep things above board and ensures employees aren’t saddled with a personal or financial burden for the travel.

3. Employee Insurance Requirements

Indicate the exact level of insurance employees must carry to drive for company purposes. Employers require their employees to have basic auto insurance and may also need full coverage, including liability and comprehensive coverage.

Asking employees to submit evidence of their insurance annually is an easy and effective way to ensure adequate coverage.

You could also request that employees notify you of any insurance policy changes, such as coverage reductions or cancellations.

4. Incident Reporting 

Create a simple procedure for reporting incidents about getting into a car for job duties. The procedure should include a time limit for employees to report to the company if they get into an accident or get a citation for the job.

Provide a form or procedure for reporting incidents and state what will happen if someone doesn’t follow the procedure.

5. Informing Employees About the Policy

Lastly, the policy should be communicated to all employees to ensure they understand it. Hold training sessions, add a FAQs section, create a downloadable guide—whatever it takes to make the policy accessible. 

Employees are less likely to misunderstand clearly expressed communication, which should help them see that compliance is necessary for their safety and their employer’s liability. 

Employer Insurance Requirements for Employee Vehicle Use

⁤

Employees who use their own vehicles for business must have adequate insurance coverage to ensure both the employee and the employer are not unduly burdened financially in case of an accident. ⁤⁤  

Though most individual auto insurance covers a personal vehicle, claims are not covered for vehicles used for ‘for hire’ purposes, such as delivering packages or driving passengers for pay. ⁤⁤  

Delivery services like pizza or flower delivery generally fall under this "for hire" category, often invalidating personal auto policy coverage. ⁤⁤ 

However, general business use, such as running errands, visiting clients, or attending meetings, typically does not impact coverage. ⁤

⁤Verifying Employee Insurance Policies ⁤

Employers ⁤can minimize risk by confirming employees' insurance. Employees should also let their insurance provider know they use their vehicle for work purposes so there are no surprises if a claim has to be made. ⁤

Employer-Provided Insurance Options: Non-Owned Auto Liability

Employers can secure a "non-owned auto liability" policy to further protect the company. These policies cover bodily injury and property damage when employees use their vehicles for work.  

This type of insurance does not cover damage to employees' vehicles but does safeguard the company from liability in case of accidents.  

Non-owned auto liability coverage becomes secondary if the employee's insurance is insufficient, covering any excess amount not handled by the personal policy. 

Adding “hired and non-owned” coverage to the business auto policy for businesses without company-owned vehicles can help manage these risks.  

Employers may also add employees as additional insureds on the company policy for a small premium to ensure coverage if an employee's personal insurance falls short.  

However, it's important to note that most business policies do not cover damage to an employee's vehicle.

Legal Considerations When Employees Use Personal Vehicles for Work

Employers who allow or require employees to drive their own vehicles for work tasks must be aware of certain legal considerations.  

These include:  

  • Vicarious liability

  • Non-owned auto liability

  • Implementing a clear vehicle use policy 

Employers should also know the specifics of their states. For example, in California, as noted, the ‘required vehicle’ exception mitigates employer liability for work-related injuries.  

Drawing up clear policies can protect employers and employees from liability that may not otherwise have been expected and avoid misunderstandings.

FAQs

Can I deduct mileage if I use my car for work?

If you drive your car on work-related errands besides commuting, you can often claim a mileage deduction on your tax return.  

The IRS sets a standard mileage deduction rate for expenses incurred for work-related driving. Keep a good mileage log and record the business reason for your trips.

How many miles can you write off without getting audited?

No threshold in terms of mileage will trigger an audit. Still, unusual deductions, especially a high percentage of mileage relative to your income, will raise IRS eyebrows.  

To avoid audit red flags, thoroughly document all business trips, including the trip date, destination, business purpose, and the total number of miles you drove.

Is it better to write off gas or mileage?

Typically, you can choose between the standard mileage rate and actual expenses (including gas, repairs, and maintenance). Most people find the standard mileage rate easier (and often better) to use.  

However, your situation may vary depending on how much you deduct in total actual expenses versus how much driving your business requires.

Can I write off my car payment if I use it for work?

You cannot deduct your car payment directly, but using your car for work allows you to deduct a portion of the car’s depreciation or a percentage of your actual expenses.  

You must claim the standard mileage deduction or pay your actual expenses, which include depreciation, interest, and leasing payments for business use.

Conclusion

If you have questions about employment contracts, employee reimbursement for vehicle use, or employer liability for personal vehicle accidents, post a job on UpCounsel to find a lawyer in your state with relevant experience.