Paying Hourly Employees For Out Of Town Travel
As an employer, you may need to send your employees out of town for business trips. Whether it's attending a conference, meeting clients, or visiting another branch of your company, your employees need to be compensated not only for their work but also for their travel time.
In this article, we'll discuss in detail how to pay hourly employees for out of town travel and what you need to know to ensure that you're complying with the law.
Understanding the Law
Before we dive into how to pay hourly employees for out of town travel, it's important to understand the relevant laws and regulations.
The Fair Labor Standards Act (FLSA) requires employers to pay non-exempt employees at least the minimum wage for all hours worked, including travel time. However, travel time is only considered work time if it falls within the employee's regular work hours.
For example, if an employee normally works from 9:00 am to 5:00 pm, and you ask them to travel from 10:00 am to 2:00 pm, you must pay them for those four hours of travel time. However, if the employee travels outside of their normal work hours, such as on a weekend, you're not required to pay them for that time.
It's also important to note that if an employee is traveling overnight for business, they must be compensated for their travel time, meals, and lodging expenses.
Types of Pay for Out of Town Travel
When it comes to paying hourly employees for out of town travel, there are several options available. Let's explore each one in detail.
Regular Pay
The simplest way to pay hourly employees for out of town travel is to pay them their regular hourly rate for all hours worked, including travel time. This is the most straightforward method, and it ensures that employees are compensated fairly for their time.
Overtime Pay
If an hourly employee's travel time pushes their total work hours for the week above 40, you'll need to pay them overtime in addition to their regular hourly pay. For example, if an employee normally works 35 hours in a week, and they travel for 10 hours, you'll need to pay them overtime for the extra five hours.
Per Diem
Per diem is a Latin term that means "per day." In the context of out of town travel, per diem refers to a daily allowance that employers give to employees to cover their food, lodging, and incidental expenses while they're away from home. Per diem rates vary depending on the location and duration of the trip.
Per diem is usually given in addition to regular pay, and it's tax-free for the employee up to a certain amount. Check with the IRS for the most up-to-date information on per diem rates and tax regulations.
Mileage Reimbursement
If an employee uses their personal vehicle for out of town travel, you can reimburse them for their mileage. The IRS sets a standard mileage rate each year, which employers can use to calculate the reimbursement amount. The 2021 standard mileage rate is 56 cents per mile.
Mileage reimbursement is tax-free for the employee and tax-deductible for the employer.
Documenting Out of Town Travel Expenses
When paying hourly employees for out of town travel, it's essential to keep accurate records of their expenses. This includes receipts for meals, lodging, and transportation, as well as a log of the hours worked and the purpose of the trip.
Keeping good records not only helps ensure that employees are paid accurately, but it also protects employers in case of an audit or legal dispute.
Conclusion
In conclusion, paying hourly employees for out of town travel requires careful consideration of the relevant laws and regulations. As an employer, it's your responsibility to ensure that your employees are compensated fairly for their time and expenses.
Whether you choose to pay regular pay, overtime pay, per diem, or mileage reimbursement, make sure to keep accurate records of all expenses and hours worked. By doing so, you'll not only stay compliant with the law, but you'll also build trust and loyalty with your employees.