When Employees Travel: Wage and Expense Rules Employers Must Know

Travel pay computations can be complex and confusing, even for experienced payroll professionals. The FLSA and state wage and hour laws require employers to pay employees for all hours worked and include all hours worked in computing overtime compensation. An employee's total hours include all time spent doing work for the employer including time spent traveling on behalf of the employer. 

Different rules apply for commuting, travel away from the employee’s tax home, and local travel between work locations. Rules also vary based on whether the employee is driving a company or personal vehicle or using public transit, and whether the employee is exempt or non-exempt. Some states have enacted travel pay rules that differ from federal guidelines. 

Employers may pay different rates of pay for time spent in different types of work, reimburse expenses provide travel allowances to employees, or provide other types of compensation for time away from home. Where employees receive reimbursement for expenses, specific documentation and reporting rules must be followed or the reimbursement may constitute additional wages to the employee.

• Hours worked – hours that must be compensated and hours that count toward overtime
• How to compute regular and overtime pay for employees who travel
• Expense reimbursement plans – accountable and non-accountable plans
• Documenting travel expenses for an accountable plan.
• Using per diem allowances
• Payments must be included in employee taxable wages. 
• Employee travel-related administration issues

• Payroll Supervisors and Personnel
• Accounts Payable Supervisors and Personnel
• Public Accountants and Enrolled Agents
• Internal Auditors
• Payroll Compliance Officers
• Employee Benefits Administrators
• Officers and Managers with Payroll Compliance Oversight
• Company / Business Owners
• Managers/ Supervisors
• Public Agency Managers
• Audit and Compliance Personnel / Risk Managers

Patrick Haggerty is a tax practitioner, author, and educator. His work experience includes non-profit organization management, banking, manufacturing accounting, and tax practice. He began teaching accounting at the college level in 1988. He is licensed as an Enrolled Agent by the U. S. Treasury to represent taxpayers at all administrative levels of the IRS and is a Certified Management Accountant. He has written numerous articles and a monthly question and answer column for payroll publications. In addition, he regularly develops and presents webinars and presentations on a variety of topics including Payroll tax issues, FLSA compliance, information returns, and accounting.