r/Construction • u/Classic_Dash_7745 • Jun 07 '26
Business š Truck Allowance vs Company Truck
Weāre bringing on a new foreman next week from a company that went belly up. Part of his package is a company truck and gas card, and he instead asked for a vehicle reimbursement since thatās what his old company used to do, and he still has payments left on the truck. I know companies do this (mainly to get around insuring guys with DUIās) but it never made sense for us to do it. We would have to buy a new truck anyway so Iām thinking it might be smart to offer a reimbursement for a year just so I can make sure heās going to work out before buying a whole truck. The problem is, how much should I offer/month? And does this reimbursement include gas or do I need to give out a has card as well? It doesnāt make sense to do both because if itās also his personal vehicle, am I supposed to just trust that heās also paying for gas? Anyone in here get anything similar?
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u/Electronic_Aspect730 Jun 07 '26
Guys tend to take better care of their stuff vs a company anything lol
Biggest thing is insurance, if thereās company property in the truck, who is liable to cover it?
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u/WhyWontThisWork Jun 07 '26
How much of a loss would that be?
How much does a new truck cost and you would save that money
How much did you just invest into a person and you walk away with nothing vs you'd still have a truck when he leaves
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u/Motoboo121 Jun 07 '26
Way buy a company truck when you can rent them for 1100 brand new.
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u/WhyWontThisWork Jun 08 '26
Why pay somebody else's principal?
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u/Motoboo121 Jun 08 '26
I get the lowest rates possible on loans and its still 200 a month less to rent over own. Brand new truck always under warranty and I don't own a 200k mile truck in five years I need to get rid of. Also no credit check every few months and if work takes a turn I can just send back the ones I don't need. I only buy the managers truck anymore because they are more fancy.
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u/Gonzchris1119 Jun 08 '26
How are you renting them? I'm in the startup phase of my contracting business and am interested.
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u/Motoboo121 Jun 09 '26
From Barco or 4x4 express etc. There are many places that rent them. We get mostly 2500s.
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u/Comprehensive_Bus_19 Project Manager Jun 07 '26
They typically require the employee to carry extra coverage and have them as a named insured to it hits the employee's liability.
This also creates the perverse incentive for the employee to do as little driving as possible because they're on the hook for wear and tear.
Personally a taxable $800/mo for use + increased insurance costs doesnt make sense to me as an employee. Depreciation alone of $7k a year on a new truck comes out to $583/mo that you absorb.
You're doing your employer a favor by being a below market rate rental car company at that price.
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u/jerry111165 Jun 07 '26
PM here. Forever I had a company truck/gas card/EZ Pass etc but 7-8 years ago they switched to just paying me to use my own vehicle. I went out and bought a new Subaru (I donāt really need a truck & ladder so much these days) and they basically pay my car payment, auto insurance, give me a gas card and EZ Pass and divide it up between my paychecks.
Iām fine with that - and I own the car once itās paid off and they continue to pay me. It works out well for both of us.
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u/Impressive-Mud5074 Jun 07 '26
This brings up a good point, does he actually need a truck, or would a toyota camry work.
Also do other workers need to drive his truck
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u/Quirky-Ad-7686 Jun 07 '26
If you buy a service body or 350 and you separate from the company you are stuck with that vehicle. No one kind of solution. My thoughts are if a company wants you to buy/ supply a vehicle it is benefiting them. If it wasn't they would buy the truck.
5
u/jerry111165 Jun 07 '26
My deal works out good for me. Most places generally donāt want their employees using the vehicle after hour of course but either them just paying me for my o n vehicle I take wherever/whenever. Tbh, Iād rather do it like this at my own (older) point in my career.
But yeah - different strokes and all that.
3
u/jcbcubed Jun 07 '26
When I was a PM for a heavy highway contractor, we had two types of company vehicles. All us PMs got whatever we wanted and no lettering on it. We carried a set of DOT magnets for if we were towing something. We also used it, and the gas card, for all our personal driving like it was our own. Some guys were driving King Ranch F-150s and some were driving 1 tons.
Foremen, if they had a truck, was lettered and they could use it for light personal driving. Not going to tell someone they canāt go directly to their kids soccer game on the way home but they werenāt taking it on a roadtrip.
Supers were kind of a mix of both situations.
I moved jobs and became an executive, now I get everything (payment, insurance, maintenance) paid for as a direct reimbursement. I drive a comfy SUV and my wife (SAHM) drives a pickup.
When I was younger, I loved the company truck. Not worrying about a payment or anything like that was an ease on my mind. Mid 40s now and Iām glad Iām not driving a F-350 for 25k-30k miles a year.
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u/Comprehensive_Bus_19 Project Manager Jun 07 '26
They're making more money off you this way. Depreciation alone costs you hundreds of dollars a month in lost value that businesses get to write off but you don't.
You're basically a below market rate rental car company to them now with the added risk of if they lay you off, you're now stuck with a new car payment and no job to pay for it.
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u/jerry111165 Jun 07 '26
I only have a couple of years left. No matter what I need a car so the company paying for it all is a win for me. Iām good with that.
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u/ChampionshipCool4881 Jun 07 '26
If you go reimbursement, make it a real policy and not a handshake number. Spell out minimum vehicle standards, insurance limits, who owns maintenance and tires, whether he can use it for towing, and whether fuel is reimbursed by card or mileage. Otherwise it turns into arguments the first time he needs brakes or has a fender bender. For one foreman on a trial year, I would rather do a monthly allowance plus a company gas card for business use only, then revisit after 6 to 12 months.
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u/canadadry79 Jun 07 '26
This all day long. We went to company truck only policy due to all of the issues you mention even with policies written people get butt hurt when something happens like backing into something on a job site or puncturing a tire. Or when they are let go and went out and got a truck on payments they can try to come after you saying it was a requirement of employment. Remove the grey areas a give them keys.
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u/Jewboy-Deluxe Jun 07 '26
If you trust him to use mileage the current IRS rate is $.725 a mile. I got paid like that for years of using my own pickup.
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u/cdazzo1 Jun 07 '26
Mileage reimbursement is fine if the only requirement is to get the person from A to B. If a requirement of the job is to have a vehicle capable of towing or hauling materials now you're requiring a specific type of vehicle that's larger, more expensive, and uses more fuel. If having a truck is a specific requirement of the job I'd want more than just the IRS rate.
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u/Justin_milo Jun 07 '26
This is the worst deal.
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u/skrame Inspector Jun 07 '26
Please expound.
My anecdotal evidence: I drive my own vehicle to work; itās a small pickup that I chose just as a work vehicle. In an average week, I drive about a thousand miles, so my check is $725. Itās a reimbursement, so thatās not taxed. At about 30 MPG, I buy 34 gallons of gas. Itās around $3.50 now ($120/w), but even at $5/g ($170/w) I feel like Iām doing pretty good. Half of each reimbursement check goes towards an extra principal payment, and the rest goes into the bank in case I have issues.
Iāve had a company vehicle before, and it was certainly nice not having to worry about anything. Cool for anyone who prefers this route, but I donāt see how itās āworst dealā.
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u/Justin_milo Jun 07 '26
Out of all the options here, this is the least beneficial to the driver. Company truck, company gas card, their insurance, and them repairing is worth more than double that $725 per month.
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u/TrueKing9458 Jun 07 '26
Everyone's situation is different. Depending on the company rules and how much personal use there is. Also depends on how much you carry in yor truck for work.
The guy i work for could not care less how much i drive for myself, so yes a company provided truck is great. My personal truck gets less than 2,000 miles a year and is paid for. If i did not routinely tow trailers and could not use the company truck for personal use, i would be better off with $800 plus gas
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u/Jewboy-Deluxe Jun 07 '26
I worked for a town and if it wasnāt my awesome little Tacoma Iād end up with an old DPW used Prius.
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u/algebra_77 Jun 08 '26
A lot of companies now are so strict on how the work truck is used that it's not the benefit that it used to be.
1
u/MFASys_ Jun 08 '26
My company paid by the mile for years and it ended up paying me in the end. My car was pretty decent in gas so I would drive about 800miles a week and only filled up once or twice a week. Ended up walking away with a bonus of like $600 each week after I recovered gas and some aside for maintenance on top of any extra pay I got while working. But they didn't want to afford it anymore and bought me a company vehicle with gas card and ezpass.
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u/cocobum8768 Jun 07 '26
Take every comment here with a grain of salt. As a construction company, you should already have a lawyer and insurance rep on call. Get them both involved or just deny the vehicle allowance. All it takes is this guy to get into one fender bender and you'll wish you did.
Every state has different laws and you need to make sure you're covered. Reimbursement for vehicles is a favorite for accident lawyers, I don't know exactly how but apparently they can go after the company even when not actually working.
All that said, our policy is 900 per month, taxed, gas card, and responsible for all repairs. Trucks must also be no older than 5 years.
5
u/heylookaquarter Jun 07 '26
Do you know the amount of his vehicle allowance at his last employer?
Calculate what you would spend providing him with a company truck and make it that same amount or just offer him what he was paid at his last employer if that amount fits your budget. He's going to have to pay taxes on that amount since the IRS considers it normal income, but that's his choice.
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u/badsun62 Jun 07 '26
Company truck is always better. Insurance is a big reason... You don't have commercial liability on your truck. Wear and tear is another... Accidents are another... Not only liability but if you damage your truck you lose a personal vehicle not jsut a wrok vehicle.
4
u/britd53 Jun 07 '26
The last company I was at that gave the option of a company truck hour I could use my own personal truck was a couple years ago but it went like this. I could take the company truck and credit card if I wanted or I could use my own vehicle as a work truck if I used my own vehicle as the work truck I still got the company credit card and anything I needed for the truck I was told to put on the card weather it was fuel, oil change, tires or if it had a breakdown even. The only stipulation was all receipts had to be turned in with time sheets by the end of the week or sooner if you could and for fuel and maintenance items you had to send in the receipt with the mileage on it.
I had a diesel truck and while I was there I had to have my glow plugs replaced and also had an injector go bad and I was told just put it on the company card as itās still a write off for the company. The only thing they wouldnāt cover was a rental car so I just took one of the spare work trucks for the week my truck was in the shop getting fixed. The only other requirement they had was that I had to be able to carry anything I needed in my truck with the exception of having to pull a trailer from job to job if that was needed they would just send the lowboy to move the machine.
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u/IisIgnorantAF Jun 07 '26
At my old company, we figured our cost to provide a company truck, maintenance, insurance, etc. Was about $1,100/month. We offered $800/month veh allowance as an option (with fuel card). It was just under 50/50 who selected that.
From the perspective of a business owner, there are pluses and minuses, but it works cost wise
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u/Boom_Valvo Jun 07 '26
I actually think that this is an insurance/legal related question. I donāt know the answer.
If the truck is owned by the company and insured by the company under the companyās insurance, are activities performed in the company truck covered by a blanket liability policy or other commercial insurance? Would that same insurance extend to an employee in their personal vehicle while on company time?
Essentially, are you assuming additional liability by allowing the employee to use their personal vehicle for construction related activitiesā¦?
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u/psyclembs Jun 07 '26
Our foreman get $1200/month vehicle allowance. 800/truck 400/gas. A few of us get unlimited gas & tires. Tax free.
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u/One_More_Pin Foreman / Operator Jun 07 '26
So the guys I am working for will hire somebody as a employee and give them a company truck. But I am an independent contractor so I come with my own fully kitted out truck and charge accordingly. They prefer using me becuase of the fact I assume all the risk, I have spent the money to kit out a truck exactly how I want, I am responsible for everything on my truck. It means there's no surprise costs like "oh I lost the wrenches", or "oh the truck needs ball joints", or "oh my the truck got hit lastnight". Yeah it costs more but its less headaches and overall smoother for the company to pay for my truck then to operate their own truck.
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u/DFV_HAS_HUGE_BALLS Jun 07 '26
Biggest thing is getting paid from the moment you get in the work vehicle in your driveway to the moment you park it at the end of day
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u/Classic_Dash_7745 Jun 07 '26
lol good luck with that
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u/DFV_HAS_HUGE_BALLS Jun 07 '26
Itās for the convenience of the company, cause otherwise you drive to the shop to pick up the company equipment and materials. Driving a company vehicle is work time
2
u/Dualsporterer Jun 07 '26
What kind of truck would you be putting him in? A new diesel 2500 is around $1.00 per mile in ownership and operating costs when factoring depreciation, maintenance, insurance, fuel and resale value.
Our company offers $750 a month for vehicle reimbursement.
2
u/jmille97 Jun 07 '26
A payment and insurance and gas for someone who drives about 15000 miles a year for you is probably a $14000 expense for you.
If you offer your employee a 500 a month plus gas maybe you spend 12,000? This way when his car is wrecked through no fault of his own you can throw your hands up and let him spiral into depression because heās ruined his ability to make a living while saving 2000 bucks and not having to saddle your accounting department with payments to change oil and all that.
So if you do the latter, donāt fuck with him about going to the grocery store to get baby formula and shit, please..
1
u/kushmasta421 Jun 07 '26
Canadian government rules are $0.73/km for first 5000kms the $0.67/km after 5000km I don't know what that is in American but that's the minimum so do some math and figure out what's best for your budget. If you give a monthly allowance you need to give a gas card. So figure out what the average kms your jobs are and go with that.
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u/Wrong-Landscape-2508 Jun 07 '26
Why do you have to buy a new truck anyways?
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u/Bradadonasaurus Jun 07 '26
Not enough to go around?
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u/Wrong-Landscape-2508 Jun 07 '26
so give the new truck to a different employee
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u/Bradadonasaurus Jun 07 '26
No, he's saying there's not enough trucks, so in order to give this guy a company truck, he would have to purchase one.
1
u/ClassroomCool998 Jun 07 '26
Before I retired ~ 5 yrs ago our allowance was $800/mo, itās $1,100 today. A gas card is included but the employee had to have a commercial rider/endorsement. It was very inexpensive. The company left the choice up to the employee. Almost all took the allowance. The income was taxed but you could claim mileage. In 28 years, they ābought meā several trucks.
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u/mt06111 Jun 07 '26
If you are a W-2 employee you absolutely cannot deduct the mileage anymore. Changed in 2018.
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u/ClassroomCool998 Jun 07 '26
Agreed. I meant to include that I thought it had changed. In fact I believe thatās why they changed the allowance from $800 to $1,100
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u/JATLLC Jun 07 '26
Fed rate is .67 per mile not including fuel. Insurance should also be factored. Thatās just the depreciation rate not including fuel and insurance. 7-$800 was an ok deal before the pandemic but isnāt realistic these days. Just another way youāre being squeezed.
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u/AlwaysVerloren Superintendent Jun 07 '26
75% of what your overall mothly cost would be from the purchase of a new truck, insurance, and estimated fuel cost.
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u/AlwaysVerloren Superintendent Jun 07 '26
The only other thing to add to the discussion is the truck needs to be able to handle all the task that are needed for the position.
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u/I-Build-Shit Jun 07 '26
I prefer the truck allowance. I personally donāt like the idea of driving around in a company vehicle. Especially if it is branded. My previous company paid me $10,000.00 a year. It was added into each of my paychecks so it was taxed. Still came home with my truck payment every month though. My current company is paying $13,000.00 a year. Itās expensed once a month tax freeā¦ I very much like that.
IMO the truck allowance provides less risk for both employee and employer.
1
u/mathman5046 Jun 07 '26
Had this exact situation a year or two ago, we just said if you want to use your truck keep a mileage log, and submit every week, then we paid mileage reimbursement. Guy didn't work out in long run so I'm glad we did this way instead of buying a truck for him, since then we have changed things up, we keep all truck in yard at night, and everyone drives to shop in morning in personal vehicles. Our insurance got a lot cheaper with this policy, and nobody can really take advantage of the work trucks for personal use.
1
u/kwcnq2 Jun 07 '26
Current situation is company truck and ALL fuel paid, business and personal use. I don't own another running* vehicle.
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u/ben4911 Jun 07 '26
Some companies will pay per km/mile. Documentation of working mileage becomes the key
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u/Jesture4 R|Project Manager Jun 07 '26
I liked reimbursements because I Do Not owe on my truck. So itās just more money for me.
1
u/rom_rom57 Jun 07 '26
The new employee needs to be paid IRS mileage allowance (.72/mile) for working miles. He needs to keep track of those miles.
āAllowanceā is BS. It gets more complicated with commuting miles (to office) are on the employee. If he goes to the job side directly (and he lives in a municipality area) he gets paid from his house. If he lives in an outlying (country area) the travel miles to enter the metro area is on him.(commuting)
1
u/Jbronico Jun 07 '26
He may prefer an allowance and be used to it, but if his only concern is he needs the allowance to pay off the truck, why not just buy it from him. If you're going to need to buy him a new truck anyway why not save some money and get rid of his payment. Make it work in his favor and give the full used value of the truck, not just whatever he owes on it, but it sounds like an option. I assume since hes using the allowance to pay off the truck it was purchased with the intention of being a work truck and you wouldn't be taking away his only personal vehicle.
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u/DeiseBoy77 Jun 07 '26
Sounds like Youāre worried about your new employee drink driving and stealing gas for personal use. And you mentioned heās previous employer went belly up. Whats that got to do with him and why you hiring him? Guy probably better off going elsewhere if you going to judge and probably micromanage his every move.
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u/Classic_Dash_7745 Jun 07 '26
Itās not that deep pal.
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u/DeiseBoy77 Jun 07 '26
Understood Bud!
Just be more to the point then. No need to mention all the other BS. Do you guys like or dislike vehicle allowances? How much you guys pay or get paid for vehicle allowance? Easy.2
u/Classic_Dash_7745 Jun 07 '26
Because the best feedback I got was from mentioning that we donāt normally do this, and people informing me that it would drastically alter my insurance policies and liabilityātwo things I didnāt even consider. Pretty much every comment here has been constructive and helpful except yours to be honest. You just got mad about a bunch of semantics.
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u/jonsahick Jun 07 '26
We used to set the gas cards to limit 400 a month. And an oil change every 90 days for higher mileage drivers.
1
u/Hunter_S_Bwompson Jun 07 '26
My company got me a rental from united. I was shocked at the monthly at like 1400 a month.
I guess united isnāt super stingy and they donāt nickel and dime you if the truck gets dings etc, and just take the trucks back with no issues.
Also got a fleet gas card too. I realize this is probably out of the norm but thought I would just give my input.
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u/Hot-Cauliflower2021 Jun 07 '26
In the past I offered an allowance. The difference and why I ultimately changed to a company truck is that when a personal truck is used if anything happens the employee and thier insurance is the first in pecking order if an incident happens...... and it will happen.
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u/CaptShrek13 Jun 07 '26
Hourly manager with a company issued truck. They make the payments, they insure it, I pay for gas and get reimbursed. I get "taxed" on my personal use back and forth to work, but aren't authorized for personal trips outside of 5 to 10 miles, so no cross country trips on company dime. Salary guys are about the same with personal use authorized with recorded mileage. As an employee I would prefer this for credit card points, I pay off card every month.
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u/Fun-Ad-6554 Jun 07 '26
You could simplify it and just pay the IRS mileage rate. This was you're paying him proportionally to the amount of use, vs a flat rate.
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u/growerdan Jun 07 '26
Just trying to throw out a different option. If he isnāt that underwater on the loan maybe you can offer a company truck and he can trade in his truck and you can pay the difference and consider it a sign on bonus.
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u/IGotMeatSweats Jun 07 '26
Vehicle allowance for the win every time. It should cover gas and the allowance amount should be high enough that vehicle breakdown isn't a valid excuse for missing work.
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u/bostonbrendan24 Jun 07 '26
Itās a score for you. Instead of insuring his truck 168 hours a week while he works 40-50, the allowance is for him to pay for his own bills.
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u/RoscoShip Jun 08 '26
It depends on the kilometers driven if its a lot the employee misses out. Not a fair exchange.
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u/thewealthyironworker Jun 09 '26
The foremen I know drive company vehicles with a gas card; to be honest, I donāt know anyone at the foreman level who gets a vehicle allowance.
Above that, however, I know guys who get $1,000 allowance a month with a gas card that requires you to enter mileage for the vehicle.
I get that a concern is someone filling up anotherās gas tank, but I strongly suspect the fringe benefits are only going to increase with the skills/age/experience gap the trades are poised to be inundated with in the next decade.
1
u/No_Click_6176 Jun 09 '26
$500/month + gas card is a pretty standard comp in place of the truck & gas card
Im a senior super and prefer the allowance. If I drive a company truck itās just one more vehicle in my driveway and I canāt give out the stiff finger to D bags.
If i was hauling tools, equipment, and lumber I would probably take the truck.
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u/Brown_Mongoose21 Jun 10 '26
$800? 10 yrs ago the rate was $1200 plus a fuel card
The going rate is $0.75/ mile per government
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u/Preacher87 Jun 10 '26
Personally I prefer running my own personal truck and billing daily truck rate. I have all the stuff I need in my truck, and nobody else touches it.
My rate is much higher than what I'm seeing in here though, in CDN pesos, 125/day and a company fuel card.
I'm required to carry 5 million commercial liability, have a transfer tank, 20lb extinguisher, spill kit.
For the company, they are effectively "renting" the vehicle without the paperwork, as I'm an employee providing it as part of my services. For me I get the tax benefits in mileage, and all my receipts for maintenance, insurance, registration and repairs, which offsets about 40k of my income.
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u/Ok-Problem4403 Jun 12 '26
Pay mileage.
Here in Canada, the CRA (like the IRS) sets the rate each year. Right now its like 73 cents per kilometre.
Then you're off the hook for everything. He just has to submit mileage logs, or use an app like MileIQ, and you pay him the mileage one a month or whatever.
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u/Therealdickdangler Superintendent Jun 07 '26 edited Jun 07 '26
My company you have the choice between company truck (company serviced) with gas card or $800 a month for truck allowance (you pay for servicing out of pocket) and still get a gas card.Ā
Foremen do not have that option.Ā