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How to Minimize Unauthorized Use of Corporate Assets

February 24, 2018, by Mike Antich - Also by this author

A growing number of employees are using their company vehicles as a tool to generate supplemental personal income for themselves. According to the National Labor Bureau, almost 6% of employees engage in side jobs, commonly known as moonlighting.

Service industries are the most vulnerable to moonlighters. Unscrupulous service technicians are known to use company vans to moonlight for their personal business. A common example involves employees working in landscaping, plumbing, or home improvement, who will make a deal with prospective customers after the initial job estimate was rejected because of price. These unscrupulous employees will offer to do the same job at a lower price, on their personal time, but often using corporate assets, such as the company vehicle using the tools and parts it carries.

Moonlighting has major repercussions for businesses. For instance, moonlighting employees consume extra fuel, incur unnecessary vehicle wear and tear, and siphon away job income from the primary employer. Moonlighting also creates unnecessary expenditures to replace pilfered inventory, reduces vehicle resale value due to accumulating higher mileage, and has a negative impact on brand image and reputation if substandard work is performed. In addition, there is a decrease in productivity from tired employees who are working after-hours at multiple jobs.

Another trend in unauthorized usage of company vehicles is working as an Uber or Lyft driver. Other moonlighting activities involve the secretive use of a company vehicle for part-time direct sales, such as Avon, or for pizza delivery by children of employees, who, as a family member, are authorized by company fleet policy to drive a company vehicle.

Increased Liability Exposure

Unauthorized use of corporate assets increases a company’s liability exposure to vicarious liability or negligent entrustment lawsuits. Even though a moonlighting employee may be acting as an independent contractor when engaged in outside work, he or she may still be driving the employer’s vehicle, using the employer’s tools, and possibly even wearing the employer’s uniform. Moonlighting employees often do not carry general liability insurance coverage. In the event of a lawsuit this increases the prospect for a plaintiff’s lawyer to include the moonlighter’s employer in the lawsuit, which is viewed as the deep-pocket defendant.

Moonlighting is a Safety Risk

Moonlighting is dangerous. If an employee is working multiple jobs, it is inevitable that they will be fatigued and sleep deprived, resulting in poor attentiveness, both on the job and behind the wheel. Employees exhausted from moonlighting over the weekend or after-hours are injury prone. If injuries occur during moonlighting, they may get misreported as on the job accidents, driving up workers’ compensation costs.

Tools to Inhibit Moonlighting

One way to minimize moonlighting is by exercising tight control of parts inventory. Track every part purchased from the time it enters inventory until it is sold. If you have a tight control on parts inventory, moonlighters will think twice about inventory theft. It’s not unheard of for some proactive companies to do a sting to catch employees in the act of moonlighting, but care must be taken so that it is not construed as entrapment.

Some primary employers seek to curb moonlighting by requiring workers to sign non-compete agreements. If employees’ moonlighting work violates the non-compete agreement, the primary employers can fire them and seek injunctions, but be advised that non-compete agreements are illegal in some states.

The best way to control moonlighting that involves corporate assets is through fleet policy that specifies permitted usage. Fleet policy should include:

  • Prohibition of loaning the vehicle to unauthorized users, hiring it out to others, using it in any livery operations, or any other enterprise not approved by the company.
  • Prohibition of attaching equipment to a company vehicle, such as snowplows, winches, or roof-top carriers to be used for personal business.
  • Prohibition of towing of trailers, boats, or campers.

It is important to make fleet policy flexible enough to cover unanticipated situations. If fleet policy lists prohibited vehicle uses, be sure to include the qualifying phrase, “including, but not limited to.” No fleet policy can be 100% successful in preventing employees from abusing personal use privileges, but, it can inhibit them and spell out the consequences of doing so.

Another way to minimize employee moonlighting is by tracking employees legally through GPS to detect location and unauthorized usage of vehicles by monitoring estimated fuel costs, mileage, and other metrics that you choose.

Making Potential Moonlighters Think Twice

Fleet managers must be vigilant about the unauthorized use of corporate assets and aggressively implement preventive measures that will make unscrupulous employees think twice before engaging in this deceitful activity.

Hold tutorials with employees to explain the capabilities of the GPS system to gently reinforce to wanna be moonlighters that their actions are being recorded. Explain to employees how inventory is tracked to inhibit the temptation of using company parts thinking no one will be the wiser.

Lastly, but most importantly, use a written fleet policy to spell out the prohibitions against unauthorized usage of corporate assets and the consequences.

Let me know what you think.

[email protected]

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Author Bio

Mike Antich

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Editor and Associate Publisher

Mike Antich has covered fleet management and remarketing for more than 20 years and was inducted in the Fleet Hall of Fame in 2010.

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