Smart Money and CNN have both reported cases of employers trying to help out employees with the high cost of fuel.  My wife informed me of a very personal case where an employer is not only not helping, the employer is passing along the high cost of gasoline to its employees.

I think gasoline subsidies are a bad idea, but costs incurred in performing your job should be reimbursed. My wife works in outside business-to-business sales, so she drives nearly 5,000 miles per month. The majority of her work time cannot be spent in the office or at home, so a four-day work week is impossible. I have never felt that she was fully reimbursed for the “wear and tear” on her car with the car allowance that the company provides, but they a least paid for her gasoline.

Well, until a few weeks ago they paid for her gasoline.

Her boss informed the team that the company policy was changing and that they were changing the scale of fuel reimbursement.The company has a policy that I agree with — the lower your car’s gas mileage, the less they reimburse. In fact, they will pay you a slight premium if you have a hybrid car. If you drive a Hummer, you should not expect to have your gasoline bill fully paid.

A few weeks ago, my wife’s car had a reimbursement rate of 20% higher than the same car does today. Do the math: 5,000 miles at 20 miles per gallon at $4 per gallon is $1,000 per month in gasoline. Now, the company is not paying $200 of that gasoline per month.

That is a A $2,400 Pay Cut!

Essentially, this is a $2,400 per year pay cut which is more than 5% of her salary. The company has cut its fuel bill by more than 20% with the stroke of a pen, but at a high cost to employee morale. HRwebcafe reported on a study indicating that high gasoline prices cause employee productivity to go down, so imagine what high gas prices combined with a reimbursement cut of 20% does:

People concerned with the effects of gas prices were significantly less attentive on the job, less excited about going to work, less passionate and conscientious and more tense,” Hochwarter said. “These people also reported more ‘blues’ on the job. Employees were simply unable to detach themselves from the stress caused by escalating gas prices as they walked through the doors at work.

One of my wife’s co-workers just bought a new car based upon the old reimbursement tables two weeks before the change. He would have purchased a different car had he known earlier about the change.

Imagine your boss telling you that you must fly across the country to do some work, but you must also pay for 20% of the plane ticket because the tickets are too expensive. It is insane.

Advice for Employees:

Don’t count on any employer subsidy to last in this environment. When your employer does something this bone-headed in the current economy, resist the urge to tell your employer exactly how stupid they are. Quietly look for another job and then don’t burn bridges when you leave.

Advice for Employers

You cannot solve your fuel cost problems by passing them along to employees — especially the ones who hit the roads every day to earn sales for you. If you must make a policy change like this, I recommend you make it effective with the next car the employee buys and with all new employees. Try other alternatives first such as route scheduling software to encourage more efficient driving. Consider enforcing policies of driving the speed limit by using “black box” reporting devices. This will increase fuel economy and may also reduce insurance rates.

Only one thing is certain: We have not seen the last of the effects of high gasoline on the economy.

Technorati Tags: gasoline, inflation, work, policy, gas prices, economy, employee

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