It’s common for employers not to consider this question until an employee is about to fly to a conference or go on-site to a client for the first time — when must I pay my employees for hours spent traveling?
However, it’s better to be prepared before this situations arise. Let’s take a look.
Why does your business need an accountable expense plan?
Who Gets Paid for Travel Time?
First, let’s break down which employees are eligible for travel time compensation and which are not. Exempt employees generally are not entitled to additional compensation for travel time. In other words, compensation for travel time tends to be a non-exempt affair. For both salaried and hourly non-exempt employees, work-related travel time — other than an employee’s regular commute to and from work — should generally be compensated and count toward an employee’s hours worked for the purposes of calculating overtime.
Related Article: A Simple Guide to Exempt vs Non-Exempt Employees Under the FLSA
Second, let’s dissect the different types of travel time under the Fair Labor Standards Act (FLSA). You should also have your travel time pay practices and policies reviewed by your legal counsel for the states and localities in which your employees are working to ensure compliance with applicable laws, and to ensure that your policies and practices are appropriate to your particular situation.
Types of Travel Time
Commuting: The time that an employee spends traveling from their home to their usual work site generally is not counted as compensable work hours.
Non-exempt employees who travel as part of their principal working duties should be compensated for this time.
All in a Day's Work: Non-exempt employees who travel as part of their principal working duties should be compensated for this time. Such compensable travel time might include an account executive traveling between multiple offices for meetings, a repairman going from one assignment to the next, or a delivery driver transporting merchandise from the warehouse to its destination.
Commuting on special assignment: If an employee is traveling from home to a non-typical work location and back home in the same day, they are commuting on special assignment, and the amount of time that the employee spends traveling to and from the non-typical work location that exceeds the employee’s normal commute time is generally considered compensable travel time.
Related Article: Expenses 101: Proper Substantiation of Business Expenses
An example here might be an employee who is attending a conference downtown which is farther away from the employee’s regular, assigned office. So, employees must be compensated for time spent traveling to a different work location that is beyond the amount of time they normally spend commuting to their regular assigned work location. Makes sense, right?
Travel Away from Home Community: The applicable rules can be complicated. Generally, employees should be compensated for all time spent traveling during regular business hours, and under the FLSA, travel time associated with overnight stays is generally considered compensable work time when it “cuts across the employee’s workday.”
Generally, employees should be compensated for all time spent traveling during regular business hours.
This is also true for non-working days, as long as they are still on the business trip. However, if an employee is a passenger on a plane, train, or automobile, and the travel is during non-work hours, and the employee is not required to and does not perform any work, such time might not be compensable. Keep in mind that state laws vary from the FLSA in their requirements on this issue.
Say you have a non-exempt employee that works a regular 9-to-5. On Friday at 9am, they get in a cab to the airport and fly to your Austin office. They work the second half of the day in Austin, and leave that office at normal quitting time. Over the weekend they don’t perform any work; their time is their own. On Monday they work a full day at the Austin office then fly home in the evening. Before bed they log on for an hour to prepare for their Tuesday in the home office. For what hours must they be paid?
Related Article: A Brief Primer on Safe Harbor Employee Expense Allowances
Answer under the FLSA: This employee should be compensated for their travel and work time from 9-to-5 on Friday and Monday, and assuming that they were a passenger in a plane and/or taxi during their travel home, and they were not asked to and did not perform any work during that travel time, they would only need to be compensated for that extra hour that they worked on Monday evening. Again, there may be different requirements under state law.
Please bear in mind that laws exist in numerous states that provide expanded definitions of travel time or impose additional requirements for travel time pay.
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.