If your team spends their days behind the wheel, whether visiting job sites, making sales calls, or supporting customers in the field, what you pay them to drive really matters. And as fuel prices bounce around and operating costs swing wildly from one region to the next, more companies are discovering that a flat-rate mileage reimbursement is doing the opposite of what it was meant to do. 

Instead of fairness and simplicity, it might be creating some very real inequities baked right into the system.

That’s something Ryon Packer, Chief Product Officer at Motus, sees every day. Motus powers vehicle reimbursement programs for thousands of household-name brands and has a front-row seat to what’s happening out on the road. 

Spoiler alert: it’s not great for drivers in expensive markets, nor for employers trying to control costs. Let’s dig into what’s happening, why it matters, and how data is finally catching up with the real world.

Flat-Rate Reimbursement Isn’t Going Away… Yet

You’d think with fuel prices swinging 30%, 40%, even 50% in some regions, flat-rate mileage would be fading out. But it’s still everywhere.

“Flat-rate mileage allowances are still surprisingly common,” Packer explained. “Many companies stick with them because they’re simple and familiar. The problem is that they ignore real-world cost differences across regions, from fuel prices to insurance to maintenance.”

The result is what you’d expect. “The program is either too generous in some places or not nearly enough in others, which creates inequities and unnecessary spend.”

So, while it feels simple, it’s not fair. And drivers can feel that.

The Gap Between High-Cost and Low-Cost Markets

Here’s where things get bumpy. When two employees receive the same reimbursement but face totally different costs to operate a vehicle, someone is losing. Usually, it’s the person who is working the hardest.

“In high-cost regions, drivers can be hundreds of dollars underwater each month compared to peers in lower-cost markets,” Packer said. “Think about a sales rep in California who is paying five dollars or more per gallon of gas versus a peer in Texas or the Midwest. With a flat rate, one is subsidizing the other.”

That adds up month after month, and it doesn’t go unnoticed.

This Isn’t Just a Sales Problem

Maybe you’re thinking this is a niche challenge, limited to road warriors or heavy-duty mileage jobs. Not so.

“This issue is really industry agnostic,” Packer noted. “Any company that relies on its team to visit customers and job sites regularly and has people in different geographies faces the issue.”

Fuel and insurance alone make up about half the cost of owning and operating a vehicle. When those costs double in one state compared to its neighbor, even nearby teams can experience very different realities.

Why Fleet Driver Morale Takes a Hit

Drivers are smart. They know when a system feels stacked against them. And, in today’s labor market, fairness carries real weight.

“Employees know when they’re being treated unfairly,” Packer said. “If you’re driving thousands of miles in a high-cost region but receiving the same rate as someone in a cheaper market, then it doesn’t feel equitable.”

Packer warns that this leads to “frustration, lower engagement, and ultimately turnover.” And if there’s one thing every fleet leader wants to avoid, it’s losing their most productive people because of a reimbursement policy that hasn’t been updated in a decade.

Why Company Cars Don’t Solve the Problem

When someone raises the issue of fairness, the company car conversation usually isn’t far behind. But that’s not the magic fix some hope it will be.

“To make a company car program affordable and sustainable, the company makes all the decisions about the car,” Packer said. “These choices don’t work for many employees.”

And the stories? They’re real. “I’ve heard stories including how tall someone is, how big their family is, a desire or need for certain options, their hobbies, or their pets that make the company choice in the car the wrong choice for them.”

There's also the practicality factor. Many employees don’t want two vehicles in their lives, one for work and one for everything else.

And importantly, this isn’t just about the employee. “The IRS has defined multiple solutions that give companies options about how to provide their employees with a fair reimbursement for the type of car, down to options and insurance coverages, that the role requires,” Packer explained.

That means employers still get control over program cost and risk. 

“With the right solution provider, reimbursement programs give employers equivalent levels of risk mitigation without the burden of being accountable for the vehicle 24/7," he said. "With most accidents, especially high-claim injury accidents, happening on evenings and weekends, this can make a big difference to a company’s bottom line.”

Data Is Finally Making Reimbursement Fair

Good news: technology can fix this. Location-based cost data, automated mileage capture, and program analytics are changing the entire reimbursement conversation.

“Data is the difference-maker,” Packer emphasized. “With accurate mileage capture and cost indexing by geography, companies can ensure that reimbursements reflect real costs. This means that employees are fairly compensated, and employers aren’t overpaying.”

Software solutions like Motus can also keep the program compliant and consistent behind the scenes. “Modern, data-driven solutions can automate compliance, risk checks, and reporting, so the program is both equitable and efficient.”

So, What’s Next for Fleets?

Is the flat-rate program disappearing? It’s heading that way.

“All three factors are pushing the shift,” Packer said. Employee expectations, regulatory oversight, and budget pressures are converging. “Flat-rate reimbursement is misaligned with all three of those realities. The shift toward more accurate, data-driven programs isn’t just likely; it’s inevitable.”

That means fleet managers, HR teams, and operations leaders may need to look at their current programs with fresh eyes. Because when someone’s job literally depends on driving, fair compensation isn’t a perk. It’s the foundation of a strong workplace.

And the companies that fix this now won’t just save money. They’ll keep the best drivers behind the wheel and build a culture that feels fair, modern, and ready for whatever comes next.

Prefer to watch? Check out the interview with Packer below!