How To Pay Hourly Employees For Travel: Your Legal Guide

How should I pay my hourly employees for travel? The answer is that it depends on the type of travel and the specific laws and regulations in your jurisdiction. Paying hourly employees for travel can be complex, involving federal and state laws. This guide explains your employer responsibilities regarding travel pay, ensuring compliance and fair compensation.

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Navigating Employee Travel Compensation Laws

Employee travel compensation laws are primarily governed by the Fair Labor Standards Act (FLSA) at the federal level. However, state laws can provide greater protection to employees. It’s vital to be aware of both and adhere to the stricter standard. This section will review the basics of what employers need to know.

The FLSA and Travel Time Pay Hourly

The Fair Labor Standards Act (FLSA) sets the baseline for travel time pay hourly for non-exempt employees. Non-exempt employees are typically entitled to overtime pay (1.5 times their regular rate) for hours worked over 40 in a workweek. The FLSA distinguishes between different types of travel:

• Home to Work: Ordinary home-to-work travel is generally not considered hours worked, regardless of distance. Think of this as the employee’s normal commute.
• Travel During the Workday: If an employee travels during the workday as part of their job, that travel time is generally compensable travel time. For example, a plumber traveling between job sites.
• Travel Away From Home Overnight: This is the most complex scenario. Travel away from the employee’s normal work location may be compensable, depending on the circumstances.

State Laws and Hourly Employee Travel Reimbursement

Many states have their own laws addressing employee travel. Some states offer greater protections than the FLSA. For example, a state law might require paying hourly employees commute time if it’s a substantial distance or for certain industries. Always check your state’s labor laws to ensure compliance. Some states also mandate hourly employee travel reimbursement for expenses.

Key Concepts: Compensable Travel Time Explained

Deciphering compensable travel time is central to paying your hourly employees accurately. Here’s a detailed breakdown:

What is Compensable Travel Time?

Compensable travel time refers to the time an hourly employee spends traveling that must be counted as hours worked and paid for. This includes time spent driving, flying, or using other modes of transportation. It does not include time spent on personal activities during travel, such as eating meals or sleeping.

Examples of Compensable Travel Time

Here are some typical situations where travel time is compensable:

• Traveling Between Job Sites: A construction worker traveling from one construction site to another during the workday.
• Traveling to a Special Assignment: An employee required to travel to a client’s office in a different city for a meeting.
• Mandatory Training: Traveling to a mandatory training session outside of normal working hours.
• Emergency Call-Outs: Travel to a job site for an emergency repair outside of normal hours.

Examples of Non-Compensable Travel Time

These situations generally do not require travel time pay hourly:

• Normal Commute: Travel from home to the regular workplace and back.
• Voluntary Travel: Travel to optional training sessions.
• Personal Errands: Travel during the workday for personal reasons, like going to the bank.
• Waiting Time During Travel: While travel time is compensable, waiting for a flight outside of the employee’s regular working hours might not be (more on this below).

Paying Hourly Employees Commute

Paying hourly employees commute is generally not required under the FLSA for normal home-to-work travel. However, some specific instances may require pay.

When Commute Time May Be Compensable

There are a few exceptions where commute time might be compensable:

• Traveling to a Different Worksite: If an employee regularly works at one location and is required to report to a different job site on a particular day, the time spent traveling to the new site might be compensable.
• Emergency Call-Outs: As mentioned above, time spent commuting to an emergency call-out outside regular hours is typically compensable.
• Special Assignments: If an employee is required to perform tasks during their commute (e.g., picking up equipment), the commute time might be considered work time.
• State Laws: Some states have specific laws regarding commute time pay, especially for certain occupations like construction.

Best Practices for Commute Time

To avoid any ambiguity or misclassification issues, consider these best practices:

• Clearly Define Work Locations: Clearly define the employee’s “regular” work location in their employment agreement.
• Track Time Accurately: Use a reliable time tracking system that accurately records start and end times, including travel time.
• Consult with Legal Counsel: If you’re unsure whether commute time is compensable in a specific situation, seek guidance from an employment law attorney.

Overtime Pay For Travel

Grasping overtime pay for travel is essential. Travel time, when considered hours worked, counts toward an employee’s total hours for the workweek. If the total hours exceed 40, the employee is entitled to overtime pay.

How Travel Impacts Overtime

• Calculate Total Hours: Include all compensable travel time when calculating total hours worked in a workweek.
• Pay Overtime: If the total hours, including travel time, exceed 40, pay the employee 1.5 times their regular rate for those overtime hours.
• Example: An employee works 40 hours in a week and has 5 hours of compensable travel time. They are entitled to 5 hours of overtime pay.

Common Overtime Pay Mistakes

• Incorrectly Classifying Travel: Mistakenly classifying compensable travel time as non-compensable, leading to underpayment of overtime.
• Failing to Track Travel Time: Not accurately tracking travel time, resulting in inaccurate overtime calculations.
• Averaging Hours: Attempting to average hours over multiple weeks to avoid paying overtime (this is generally not allowed).

Addressing Hourly Employee Travel Expenses

Besides travel time, hourly employees often incur expenses during travel. Having a clear travel expense reimbursement policy is vital.

What Expenses Should Be Reimbursed?

A comprehensive travel expense reimbursement policy should cover reasonable and necessary expenses, including:

• Transportation: Airfare, train tickets, car rentals, mileage reimbursement (using the IRS standard mileage rate).
• Accommodation: Hotel costs.
• Meals: Per diem or actual costs of meals.
• Incidentals: Tolls, parking fees, internet access.

Establishing a Travel Expense Reimbursement Policy

A well-defined travel expense reimbursement policy is essential. Here’s what to include:

• Eligibility: Who is eligible for reimbursement?
• Expense Categories: What expenses are covered?
• Documentation: What documentation is required (e.g., receipts)?
• Approval Process: How are expenses approved?
• Reimbursement Method: How will reimbursements be paid (e.g., direct deposit)?
• Deadlines: What are the deadlines for submitting expense reports?
• Mileage Rate: State the current IRS mileage rate.
• Policy Updates: How often will the policy be reviewed and updated?

Table Example: Sample Travel Expense Reimbursement Policy Snippet

Expense Category	Coverage	Documentation Required
Transportation	Airfare (coach), train tickets, car rentals (compact or mid-size)	Receipts, itineraries
Accommodation	Hotel (moderate price range)	Hotel bill with itemized charges
Meals	Per diem rate (as per company guidelines) or actual costs (with receipts)	Receipts (if using actual costs)
Mileage	IRS Standard Mileage Rate	Trip Logs with Dates and Distances

Employer Responsibilities Travel Pay & Reimbursement

Employers have several responsibilities regarding travel pay and reimbursement. These include:

• Compliance: Adhering to all federal and state laws regarding travel pay and reimbursement.
• Transparency: Communicating the travel policy clearly to all employees.
• Accurate Record-Keeping: Maintaining accurate records of hours worked, travel time, and reimbursed expenses.
• Timely Reimbursement: Reimbursing employees for travel expenses promptly.
• Fairness: Applying the travel policy consistently to all employees.

Mitigating Risks: Compliance and Legal Considerations

Non-compliance with employee travel laws can lead to costly penalties, lawsuits, and damage to your reputation.

Common Legal Pitfalls

• Misclassifying Employees: Incorrectly classifying employees as exempt when they should be non-exempt.
• Failing to Pay Overtime: Not paying overtime for compensable travel time.
• Inadequate Record-Keeping: Poor record-keeping practices making it difficult to prove compliance.
• Discriminatory Practices: Applying the travel policy in a discriminatory manner.
• Ignoring State Laws: Not being aware of and complying with state-specific travel laws.

Proactive Steps to Avoid Legal Issues

• Stay Informed: Keep up-to-date with the latest changes in federal and state labor laws.
• Conduct Regular Audits: Periodically review your travel pay and reimbursement practices to ensure compliance.
• Train Employees: Provide training to managers and employees on the travel policy and applicable laws.
• Seek Legal Advice: Consult with an employment law attorney to review your policies and practices.
• Document Everything: Maintain detailed records of all travel-related activities, expenses, and reimbursements.

Frequently Asked Questions (FAQ)

Q: What is the difference between “hours worked” and “compensable travel time?”

• A: “Hours worked” is a broader term that includes all time an employee is required to be on duty or at a prescribed workplace. Compensable travel time is a subset of hours worked, specifically referring to time spent traveling that must be paid.

Q: Can I require hourly employees to use personal vehicles for work travel?

• A: Yes, you generally can, but you must reimburse them for mileage at the IRS standard rate. Failure to do so can create legal issues.

Q: Can I cap the amount I reimburse for meals?

• A: Yes, you can set reasonable limits on meal reimbursements. Make sure these are clearly defined in your travel policy. If you use a per diem, ensure it is reasonable for the location the employee is traveling to.

Q: Who is responsible for tracking employee travel time?

• A: Ultimately, the employer is responsible for accurate timekeeping. However, employees should also be responsible for accurately recording their own travel time and submitting it for approval.

Q: Is travel time compensable if the employee is allowed to sleep during the travel (e.g., on an overnight train)?

• A: Generally, yes. If the employee is traveling during their normal working hours, the travel time is compensable, even if they are allowed to sleep. However, if the travel occurs entirely outside of the employee’s normal working hours and the employee has adequate sleeping arrangements, it might not be compensable (check your state laws!). This is a complex area.

Q: What if an employee chooses a more expensive travel option (e.g., a first-class flight)?

• A: You are generally only required to reimburse for reasonable expenses. Your travel policy should specify acceptable travel options (e.g., coach airfare). The employee would be responsible for any additional costs.

Q: Can I offer a flat rate or stipend for travel instead of tracking actual hours?

• A: This is generally not recommended for hourly employees. It can be difficult to prove that the flat rate accurately compensates for all travel time, and it could lead to legal issues if employees are not properly compensated for overtime.

Paying hourly employees for travel requires careful attention to detail and a thorough grasp of federal and state laws. By implementing a clear travel policy, accurately tracking employee travel time, and ensuring timely reimbursement of expenses, you can protect your business from legal risks and maintain a positive relationship with your employees. Remember to always consult with legal counsel for guidance on specific situations and to ensure compliance with all applicable laws.