It has long been our expectation that service technicians provide their own “tools of the trade” – hand tools and personal-use equipment. If you’ve been removed from turning wrenches for a time, you have probably lost perspective on the burden this expectation places on the service technician.

By one recently published estimate, the average tool investment for a service technician is around $25,000. Using the Bureau of Labor Statistics’ average earnings figure of $37,360 for bus and truck mechanics and diesel engine specialists, that $25,000 investment represents more than eight months of work. And, it doesn’t take into account an estimated $3,000 additional annual expense for tool replacement, maintenance and upgrades.

Regardless of the degree to which you agree with the actual estimates, the point should be clear that the investment and ongoing expense for tools is a significant barrier to entry into the profession and likely a deterrent from sticking with it.

Of course, one could argue that we (fleets) take these factors into account when setting technician wages. And, the technician also can realize certain tax advantages, such as depreciation expense and unreimbursed business expense deductions, for example.

Tool reimbursement/assistance programs may be one way to provide a valuable employee benefit to your technicians, help your recruiting and retention efforts and possibly open tax or expense savings benefits to your operation.

These types of programs fall into two categories: allowance programs and reimbursement programs. At the heart of both is the recognition that you compensate your technicians for their talent, time and tools, while at the same time, treating these compensation components differently – wages addressing the labor component and separate compensation for tools or the use of tools.

I know of at least one fleet that provides new, entry-level technicians with standard hand tool sets for use during the course of their employment. Technicians sign an agreement stating that, upon a set employment period (usually three to five years), they “earn” ownership of the tools; the tools are theirs to keep should they leave after this period. However, should technicians leave during this earn-back period, the fleet retains the tools. Implicit in this type of program is that wages paid reflect the company’s participation in providing the tools and, in essence, technicians “rent” the tools with a portion of their labor. The company has the benefit of depreciation expense on the asset during this time.

This type of program should improve turnover/retention, and ensures technicians are equipped to perform the work expected during the earn-back agreement.

The reimbursement program scenario more specifically compensates technicians separately for their labor (talent and time) and tools. Technicians actually receive “two checks” under this type of program. While based on a section of the IRS code that has been around since the 1940s, this type of program, originally designed for the logging industry – in which workers were required to provide their own saws and chains – has been receiving more attention recently among auto and truck technicians and their employers.

The highlights of the reimbursement approach include establishing a “fair value” for technicians’ tools, breaking compensation into a labor component and a tool reimbursement component and paying (and taxing) each separately (The tool reimbursement component usually is paid in pre-tax dollars.). In essence, the company “rents” tools from technicians.

These programs can be either self-administered or administered by any of a number of third parties. The programs show significant benefits, but because of IRS implications, due diligence is in order. Currently, the Technology and Maintenance Council of the American Trucking Associations is balloting a Recommended Practice on this type of program.

For information on specific programs, just Google “Tool Reimbursement.”