This is a small issue, but I think it is worthy of GD as opposed to IMHO. Mods, if you disagree, please take all necessary countermeasures.
Late at night, my firm provides a free car service home (billed either to the firm or the client whose case kept me at work late). On the way home, I pass through a tunnel with a toll of $3.50, and I initial the voucher so that the driver (who are independent contractors) gets reimbursed the $3.50.
The problem is that all of the drivers have EZ Pass, which gives them a discount, so they are being reimbursed $3.50 for a $2.50 (or some such) expense.
Is this right or wrong? The reason there is an EZ Pass discount is because using EZ Pass provides public benefits - traffic flows smoother, with less lost time and less pollution from idling cars for everyone. If the drivers were reimbursed only their actual cost, they would have less (though not no) incentive to use EZ Pass - thus lessening the public benefits (and there are a lot of car service drivers in NYC). At the same time, my firm or my client is being charged an expense that wasn’t actually incurred.
There’s something missing from the story. You’ve described how the toll booth expenses are handled, but what of the drive itself? What happens to an employee who does not travel through any tolls to get home? Why isn’t the same system used to track both the rides and the tolls?
Unless you can supply additional info, my wild guess is that the employees use various different methods to get home, some of which might not involve EZpass, and the company decided to give everyone a flat $3.50 allowance, regardless of whether the actual expense is higher or lower than that, in which case you’re just following the rules of the game.
Costs of a ride are pre-determined by zip code. Just as an example (i.e. the costs aren’t the actual costs), a ride from my office’s zip code to my home’s zip code is $20. Any incidental expenses, such a tolls, parking, etc., are on top of the pre-determined price.
In my case, this makes some difference. I have two viable routes home - through the toll tunnel or over a non-toll bridge. Regardless of what route I tell the driver to take, the base cost remains the same - $20. The toll of the tunnel adds $3.50 to the cost. (Going over the bridge adds, depending on traffic, 20-40 minutes to my ride, so I tell the driver to take the tunnel.)
The only thing the driver gets paid for is the ride. Incidental expenses are supposed to be reimbursed at cost.
Your firm no doubt is aware that using EZ-Pass provides the dollar discount.
Your firm has also regularly paid the $3.50 reimbursement to the drivers.
If your firm wished, it could, no doubt, ask the drivers if they used the EZ-Pass discount (putting aside the fact that the drivers may lie about it – that’s on their heads, not your firm) and only give a $2.50 reimbursement to the EZ-Pass drivers. It has not, until now, chosen to do so. Therefore, in effect, the firm has chosen to allow the drivers to keep the extra dollar. They are, of course, within their rights to change their minds on the matter at a later date.
Years ago, I would have thought it was definitely wrong, and frankly, I still have serious problems with firms charging back certain expenses, especially ones that more approximate actual costs than reflect real cost (such as a per page charge for copying), or ones that I feel are the lawyer’s cost of doing business (secretarial overtime where the secretary’s work during normal business hours involve substantial time for other clients).
Then I began to see how the little dance we do with our clients over cost is pretty complicated. A senior partner of mine will on occasion insist on flying first class simply because he wants to periodically remind his clients that he is not obligated to find the cheapest way to do everything.
The difference is, of course, that the expense is actually incurred, which makes your example stickier, although I’m a little unclear about how much the car company actually charges your firm. If the limosine charges the full $3.50, I don’t see any problem passing this along to the client. I don’t think we are obligated to negotiate the best deals in this situation.
If your firm is charged $2.50 per trip, then even though it would be easy to pass this one off as de minimis, and no one would really quibble, it’s wrong. I assume your firm does not keep these limosines fully employed such that the firm pays for the EZtag? Then reimbursement would really be a curious apportionment exercise.
Perhaps I’ve become somewhat jaded since the late nights and all-nighters are regularly done to meet false or indefensible deadlines. (We pulled two all-nighters in a row once and found out later it was to close a deal so that the CEO could take one of the aircraft subject to the deal to Europe with his family for Christmas Eve. Wonder what the shareholders thought about that use of company assets.) Obviously, charging the extra dollar back does not give me any heartburn.
Sounds to me like using a $3.50 voucher for traveling through the $2.50 tunnel would be just as unethical as using a $3.50 voucher for traveling over the free bridge. Either way, someone is paying for services not rendered.
I think your logic regarding incentives is misplaced. EZpass is a public benefit, so they give the payer (who is not necessarily the driver or car owner) a discount as an incentive to choose a car (or car service) which has an EZpass tag on it.
You’ll comment that all the car services have it. Irrelevant. They all have it because of economic competition with each other, and/or in order to save time at the toll regardless of economics.
Regarding your comment that
, consider the implications of what you are saying: If the drivers were reimbursed the full $3.50, they would have more incentive to use EZ Pass, because they’d actually make a profit on it. No one let’s me make a profit on EZpass!
No, he should get $20 for the ride, plus actual expenses, and that’s it, I say.
Zev, I’d agree with you if the company chose to give a flat $3.50 rather than asking each driver what they do.
But I think you missed the point (in 2nd paragraph of the OP) that sometimes these expenses are billed to the firm’s client, who must simply accept the list of expenses on faith as submitted, and really does not have such options. In such cases, the expenses submitted should either be actual incurred, or standardized according to some sort of firm/client understanding.
Erofeev, would it be fair to summarize your view as (1) one does not have to find the cheapest way of providing a necessary service as long as the client realizes that; (2) what constitutes “necessary” ought to be defined by what the client feels is necessary; and (3) billing the client more than actual costs incurred is wrong, especially where calculating those costs is simple (leaving copying-per-page a bit gray)? If so, I’d agree.
You are right. I did miss that point. Even so, you must still consider the following:
It is not necessarily a rule that all drivers have EZ-Pass.
It is well known that the standard fare is $3.50.
The law firm is still billed $3.50 for the toll and passes that price along to the client. The law firm is not making money off the ride. Therefore, as far as the law firm goes, they are not doing anything ethically wrong.
Nor are they doing anything wrong by not asking, for two reasons:
(1) The cost of checking on a ride-by-ride basis could very well end up costing more than the $1 saved.
(2) The firm is under no obligation to find the cheapest ride for our pal Sua. Would you say the firm is in the wrong if they don’t search out another cab company that would charge $19 instead of $20? No. It is understood that when Sua takes a cab home, he can choose his cab company (within moderation, of course. We’re not talking about limo rides here). The same principle applies with regard to the EZ-Pass fare.
I thought this means that the car service charges the firm 20 + 2.50, in which case your firm (and/or you) is the one on shaky ethical ground (depending on how hard it would be to check whether the EZpass was used on any give ride).
Zev understood that the car service chages your firm 20 + 3.50, in which case your firm is indeed billing the client for actual expenses incurred, and it is the car service who is making a shady profit on the deal.
Zev is correct - the firm does not profit from the difference between the EZ Pass toll and the charged toll. In cases where the firm pays for my ride home, the firm is the “victim”. In cases where the client pays the carfare, the client is the “victim” - the firm passes on to the client the bill from the car service as is.
Zev, I think you give too much credit to my firm. I doubt this issue has even occurred to it. All of the contracts with the car services were in effect well before EZ Pass came into being, and all of them (I’m pretty sure) simply say that the firm (or the client through the firm) will be charged carfare plus expenses, such as tolls.
That may be. But, if that’s the case, it’s up to your firm to renegotiate the contract with the car service company. If that’s the case, the car service company is entitled to set a flat rate of $3.50 (or any other amount) for tolls, regardless of the rate it actually pays. If your firm is unhappy about that, they are free to negotiate with other car service companies.
It might not even require a renegotiation. If the contract has vague enough wording, like “expenses such as tolls”, then all you need is someone from your firm’s Accounts Payable to call the car service, and say something like, “I have a bill here for ten tolls at $3.50 each. That seems to be an error, because I understand that all your cars have EZpass. That’s ten tolls at $2.50 each, and our check for $25 will be sent promptly.” End of story.
am I the first to note that the one trip home (via the tunnel w/the possability of ex pass or not), will take less time than the other???
ummm, how does that little fact monkey up the deliberations?
by taking the more time efficient method, the driver is actually optomizing their pay per hour, potentially adding more revenue to their day, and getting to pocket that dollar extra!! (and think of how many minutes of long distance phone calls that makes for!)
Also, let’s please note that it’s Sua and not the driver who gets to select the route. Hmmmm.
Doesn’t monkey it up at all. We’re all in agreement that (within reason) Sua does not have to take the cheapest route. The fact that the route which is beneficial to Sua happens to be the one that allows the car service to run their EZpass racket, does not make that racket any more unethical than it might already be otherwise.
Note that the route which gets Sua home faster also gets the car service to their next customer faster. Fortuitous coincidence, that’s all. If Sua would choose the slower route for whatever reason, that’s too bad for the car service. Hey, it was their decision to use flat-fare pricing regardless of route, right?
wring, no doubt there is a question about my ethics here as well. I allow my firm or my client to be charged an additional $3.50 just so that I can get home 20-40 minutes faster. But hey, I’m the one posing the ethics question here!!
SuaSponte how do you get to and from work normally? Does the firm pay to get you to and from work normally? This does not seem like an expense you should bill the client for no matter how much the driver is making off of the EZ pass.
gazpacho, if Sua’s company is like mine, travel to work is the morning is via subway, and travel home on late night can be by company-paid car service for reasons of both safety and convenience. (Subways are both less safe and less frequent at night.) This is seen as a necessary (hence billable) expense because without such a policy the employee might not be willing to stay late to finish the project. The company might pay for dinner too, and bill it to the client.
Put my vote in for wrong but not worth worrying about.
I am reminded of when I first opened a law office. Computerized research had been traditionally offered at about $80.00 an hour if I recall correctly. Instead I was offered unlimited usage at $60.00 a month. Then the company provided invoices showing billings by customer at the $80.00 rate and actually suggested clients be billed accordingly.
