Sending employees out on the road has countless benefits. Quite often, it’s the best way to connect face-to-face with clients and partners or seek out training from experts in the field. In other industries, daily travel is simply part of the job. Maintenance and utility workers, for example, rarely work on their homebase without a trip to a customer’s home on a weekly, if not daily, basis. So, how do you compensate employees for travel, especially when they have nonexempt, hourly contracts?
Federal labor laws have specific parameters set out by the Fair Labor Standards Act (FLSA) when it comes to determining compensable time while traveling. State laws may differ from the federal standards, so it’s important for companies to check in on their local laws as well. When these two sets of laws differ, employers should always choose the more generous of the two options.
Not sure how to compensate employees for off-site work? We’ve laid each scenario below to simplify and answer all your common questions.
Unpaid: Home-to-Work and Work-to-Home Travel
Employers are not responsible to pay for a worker’s commuting time or mileage if they are traveling to or from their traditional workplace. “Commuting,” in this case, does not count as “traveling” for work. Even if the employee lives a considerable distance from work, their typical commute goes unpaid. The Department of Labor clarifies that this is even true when operating employee-sponsored vehicles.
Paid: Worksite-to-Worksite Travel
The scenario changes when employees are required to travel beyond their commute to perform their duties. Non-exempt employees that work at multiple locations are paid if travel is required during their workday. Paid travel does not include commuting to and from their first worksite from home.
Paid: Same-Day Travel
One-day conferences or meetings outside your city may send employees hitting the road for just a few hours. If you need to send an employee out of the office for the day, this trip and time are compensable. You may, however, exclude the typical time spent traveling to and from work when finalizing their hours. This extra time counts as their typical commute as if they had come to work for a typical day.
Paid: Overnight Travel
Time spent traveling for work over one or more nights must be paid when they occur during an employee’s normal work hours. This rule stands no matter the day of the week and is always the case if the employee is the driver. This is more complicated, however, if the hours fall outside of the employee’s normal work hours and the employee is the passenger. For example, if any employee rides as a passenger outside their typical work hours — and is not required to work during that time — those hours are not compensable.
Tracking Paid Travel Time
How do you keep travel of travel time pay to ensure you meet the standards of the Fair Labor Standards Act? The key is ensuring both you and your employees are always on the same page. During your onboarding process, use this time to go over your travel policy specific to non-exempt employees. Distribute a clear travel policy before the trip, including your method for tracking hours and reporting data.
Even when you request that the employee should keep track of their own hours and expenses as they travel, the responsibility ultimately falls to the employer for best recordkeeping. For example, an employee may not realize that they should have counted their overnight trip as compensable hours and failed to submit their timesheet. Just because they did not properly record them does not mean the hours should not be paid.
Lay down to a process for communicating time worked before the travel takes place. This may come down to using your online time clock system and/or submitting an expense report with receipts upon their return.
Additional Travel Pay
Travel compensation for both exempt and nonexempt employees goes beyond hourly pay in certain scenarios. Workers should never lose money for basic needs or required travel necessities.
Optional: Per Diem
Employers are not required to offset the costs of meals on an employee’s trip, though it is customary to do so whenever possible. Either way, per diem allocations do not replace travel costs and compensable time.
If you do choose to alot a per diem, the standard practice is to provide a specific amount per meal that the employee is traveling. For example:
- $15 for each breakfast
- $25 for each lunch
- $40 for each dinner
Depends: Alternate Travel Pay Rate
You are allowed to offer a different travel pay rate as long as the hourly amount is not below minimum wage. You must also communicate the different rates with your team, preferably at the start of their employment. Be sure your travel policy, including any pay differences, are outlined in writing to avoid confusion.
If a travel time puts employees over the 40-hour workweek—which is counted as Sunday-Saturday—you are required to comply with overtime laws and pay the additional amount. When federal and state overtime laws vary, employers are obligated to follow the more generous of the two laws just as with travel standards.
Sending employees out for off-site assignments can be a valuable tool for your business. Issues only arise when the employee travel policy remains unclear before travel occurs. Always be sure to review your local and federal labor laws when creating a travel policy with your team. Horizon Payroll Solutions provides HR support and payroll management services to streamline your travel compensation process.