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Car-Pooling, Ride-Hailing, Commuting and Parking: Employer Considerations in the Age of Autonomous Vehicles

In June, Chandler, Arizona made headlines after partnering with Waymo to give city employees free transportation. The pilot program will allow Chandler to evaluate city employee productivity and savings in fleet service costs, as well as help the city determine the direction of city employee transportation.

Waymo has been testing in Chandler since the Chrysler Pacifica Hybrid minivan was added to its fleet over two years ago. The minivans, now commonly seen around town in Chandler, were the company’s first mass-produced vehicle with a fully integrated hardware suite.

The partnership between the city government and Waymo is one of the first of its kind. Each trip must start and end at the designated pick-up and drop-off zone at City Hall. Employees can schedule their rides on Waymo’s app. They are then charged to each employee’s account. Employees are required to fill out a satisfaction survey at the end of each ride.

Current city policy requires employees to place all devices that could lead to distracted driving away while in a city vehicle. With autonomous vehicles, city employees can keep working. Economic Development Director Micah Miranda explained that the pilot program serves three major purposes: (1) gives employees the ability to work while on the road; (2) relieve stress from current city vehicle fleet; and (3) gather data on human capital efficiency for future cost purposes. In addition to employee productivity, the hope is for city vehicles to last longer.

While Chandler’s program is limited to providing transportation during work hours, it is likely we will see similar programs tailored to solve parking and commuting issues in congested downtown areas. Use of autonomous vehicles in tackling these issues will also provide tax benefits to employers. Many state laws currently offer payroll tax savings for transportation assistance. Other federal programs give employers the option of subsidizing part of their employees’ commuting costs and allowing employees to pay for the remainder with pre-tax dollars. Currently, the Internal Revenue Code allows employers to offer non-taxable Qualified Transportation Fringe (“QTF”) benefits under Sec. 132(f). These benefits include mass transit benefits, van pools, qualified parking and some other commuter benefits. QTF benefits can be provided directly to employees pre-tax (free transit passes, reimbursements for parking, etc.), or the employee can pay for the benefits tax-free using a salary reduction arrangement. However, under Sec. 274(a)(4), expenses incurred for providing parking to employees that are Sec. 132(f) Qualified Transportation Fringes (QTF) are nondeductible by employers.

Innovative ride-sharing incentives and programs such as Chandler’s partnership with Waymo are also ripe with potential liability, ranging from cyber liabilities for corporate accounts to added workers’ compensation considerations. In many situations, employers are legally responsible for the actions of their employees while acting within the scope of their employment. Just last year the Texas Supreme Court found an employer responsible for the death of two co-workers while commuting to a drilling station. Painter et al v. Amerimex Drilling I, Ltd., No. 16-0120, ___ S.W.3d ___, 2018 WL 2749862 (Tex. April 13, 2018). While autonomous vehicles were not involved, these decisions highlight the difficulties self-driving technology will have to maneuver when heading to the workplace. Considering these exciting developments in Chandler, employers would be wise to consider potential changes to their transportation policies, benefits, and operations before adding their own self-driving fleet.

For assistance with employment or transportation matters, please contact the author, Daisy C. Karlson, or any member of Baker Donelson’s Labor & Employment and Transportation Group.