Travel Pay: When Are Employees Compensated For Travel Time?

Paying employees for their travel time is a complex issue that varies depending on the employee's job type, the nature of the travel, and the laws of the country or state in which the employee is based. In general, non-exempt employees are entitled to travel pay during normal work hours and when they are actively working outside of those hours. Exempt employees, who receive a fixed salary, do not have to worry about this issue as much. This guide will explore the laws and regulations surrounding travel pay and provide clarity on when employees should be compensated for their travel time.

Travel pay rates

Firstly, it is important to distinguish between exempt and non-exempt employees. Exempt employees, such as executives, administrators, and managers, are typically not entitled to travel pay. On the other hand, non-exempt employees, who are usually paid hourly wages and earn less than a specified annual income threshold, are generally eligible for travel pay.

For non-exempt employees, travel pay is applicable when they travel locally as part of their regular duties or between different worksites. Additionally, special one-day assignments and overnight travel may also warrant travel pay, even if it occurs outside of regular workday hours. However, the employee's normal commute time can be deducted from the total payment. It is worth noting that travel pay for non-exempt employees should be at least the minimum wage, but it can deviate from their standard hourly rate.

In terms of specific expenses, travel pay typically covers transportation costs, such as airfare, train fares, or mileage. Lodging expenses, including hotel stays, are also commonly included in travel pay. Meals and incidental costs, such as laundry or dry cleaning, are another essential component of travel pay rates.

Some companies may have a "per diem" policy, which refers to a fixed daily allowance to cover lodging, meals, and incidental expenses while travelling for business. The United States General Services Administration (GSA) sets per diem rates for travel within the contiguous United States and the District of Columbia. These rates are updated annually and vary based on the cost of living in each state and county.

When it comes to reimbursement, employers are generally required to issue reimbursement checks in a timely manner, typically within 30 days of an employee submitting their reimbursement request. It is important to note that reimbursements made at the standard Internal Revenue Service (IRS) rate are not considered taxable income.

Travel expenses

When it comes to travel expenses, it's essential to distinguish between travel for work purposes and regular commuting. Regular commuting from home to the primary workplace is generally not considered compensable or tax-deductible. However, there are exceptions, such as when an employee is required to carry bulky tools that cannot be safely secured at work.

If employees are travelling for work, they may be able to claim tax relief on expenses such as public transport, hotel accommodation, congestion charges, tolls, business phone calls, and printing costs. For hotel and meal expenses, it is usually necessary to provide receipts that include the date and the name of the hotel or restaurant.

In some cases, employers may choose to reimburse employees for their travel expenses. While this is not a requirement, it can help to avoid frustration among employees who have to pay for work-related travel out of their own pockets.

Additionally, when travelling for work, employees may incur other expenses such as rental car costs, taxi or rideshare fees, laundry, and dry cleaning. These expenses may also be tax-deductible or reimbursable by the employer, provided they are reasonable and necessary for the business trip.

It's important to keep in mind that the rules and regulations regarding travel expenses can vary by country and even by state within the United States. For example, in California, any time longer than an employee's usual daily commute is considered compensable travel time, while in Oregon, travel time pay is due for specific types of work travel. Therefore, it's always a good idea to consult the relevant government sources for the specific location in question.

Exempt employees

Firstly, if an exempt employee is required to drive themselves or others as part of their work, all driving time is compensable. This is because driving is considered an inherent part of the job and can only be performed while travelling. However, if the employee has the option to use public transportation but chooses to drive instead, the employer may choose to pay only for the travel time that occurs during normal work hours.

Secondly, if an exempt employee performs work while travelling as a passenger, this time may also be compensable. For example, if an employee works on a presentation during a flight, their employer would need to pay them for that time.

Thirdly, travel time may be compensable for exempt employees if it is performed within the regularly scheduled administrative workweek, including regularly scheduled overtime. This includes travel that involves the performance of work, is incidental to work performed while travelling, is carried out under arduous and unusual conditions, or results from an event that could not be scheduled or controlled administratively.

It is important to note that the rules regarding travel pay for exempt employees may vary depending on the state and local laws in the United States. For example, in California, any travel time that exceeds an employee's regular daily commute is considered compensable and must be paid at the agreed-upon regular or overtime rates. Therefore, it is essential to consult the specific laws and regulations in your jurisdiction to ensure compliance with travel time payment requirements.

Non-exempt employees

There are several types of travel time that non-exempt employees may be compensated for:

• Local travel: Employees should be compensated when they travel locally as part of their regular duties, such as travelling from the office to a supply store. This includes travel that occurs outside of regular work hours, even if they are waiting to travel, such as sitting at a bus stop or train station.
• Travel between worksites: Employees should be compensated for travel between different worksites or job sites. For example, a courier transporting materials between job sites or a repairman going from one assignment to the next.
• Special one-day assignments: Employees who travel out of town for a special one-day assignment, even if they return home at the end of the workday, are entitled to travel pay. However, you can deduct their normal commute time from the total payment.
• Overnight travel: Employees travelling overnight are entitled to travel pay during their regular working hours and any time they spend working outside of those hours, such as participating in late-night conference calls. They should also be compensated for travel during their regular working hours, even on non-working days, weekends, holidays, or their normal days off.

It is important to note that non-exempt employees are not entitled to travel pay during their commute, including the time spent driving from their home to work or from accommodations (such as a hotel) to a work location. They are also not eligible for travel pay during breaks, meal periods, or personal time.

When calculating pay for travel time, employers should use the applicable hourly rate. If travel time occurs during regular work hours, it is typically paid at the standard rate. If it occurs outside of typical work hours and qualifies as overtime, it should be compensated at the overtime rate. Travel time that exceeds an employee's regular working hours and meets the criteria for overtime should be included in the total hours worked for overtime calculation.

Special one-day assignments

In the case of a special one-day assignment, the employee's travel between their home and a non-typical work location is considered a "special assignment." This means that the time spent travelling to and from the assignment location is generally considered compensable travel time if it exceeds the employee's normal commute. For example, if an employee typically commutes 30 minutes to their regular office but has to travel for two and a half hours to a conference in another city, the company must compensate them for the two hours of additional travel time. However, it is worth noting that some companies choose to pay for the entire commuting time, even though it is not mandatory to do so.

It is important to distinguish between different types of travel time. An employee's regular commute to and from their usual work site is generally not considered compensable work hours. On the other hand, non-exempt employees who travel as part of their principal working duties, such as travelling between multiple offices or job sites, should be compensated for this time.

Additionally, when employees are travelling away from their home community, the rules can be more complex. Generally, employees should be compensated for all time spent travelling during regular business hours. If the travel includes overnight stays, the associated travel time is typically considered compensable work time when it "cuts across the employee's workday." For example, if an employee works a regular 9-to-5 schedule and travels to a different office location on a Friday, they should be compensated for the travel and work time on Friday. If they do not perform any work during the return travel on Monday, they would only need to be compensated for their regular work hours and any additional work done after returning home.

To summarise, special one-day assignments involve compensating employees for travel time to and from a non-typical work location if it exceeds their normal commute. This is separate from their regular commute, which is generally not considered compensable. When travelling away from their home community, employees should be compensated for travel during regular business hours and any associated overnight stays that cut across their workday.

Frequently asked questions