Travel Pay for Nonexempt Employees

To pay or not to pay? That’s the question when it comes to business-related travel time for nonexempt (hourly) employees.

While employers are not required to pay exempt workers beyond their salaries, hourly employees must be paid for travel-related hours. As with salaried employees, expenses such as food, lodging, and gas should also be reimbursed.

Regulations on just what qualifies as work-related travel, which travel hours are subject to the laws, and at what rate employers must pay out are complicated, and each state has slightly different laws governing this. States tend to follow the federal rules, but a few states, such as California, have stricter requirements, so it’s a good idea to do some due diligence prior to instituting a formal policy.

Destination

In general, commuting time to and from work and home is noncompensable travel, while other employment-related travel must be paid, sometimes depending on distance traveled. Federal regulations are vague on this, citing “substantial distance.” But in certain states there are more specific regulations, including Oregon, where the distance that triggers pay is 30 miles or more.

Below are a few common scenarios for which hourly employees must be paid:

• When employees are asked to go on a business trip or attend an offsite meeting
• When hourly employees are asked to drive to multiple locations during the workday, unless this is a customary part of the job, for instance, a gardener working for a landscape company who travels to multiple job sites as a condition of his or her employment
• When employees are required to report to a site different from their usual workplace, for example, a restaurant hostess who is asked to cover at another employer-owned restaurant
• When an employer asks employees to do an emergency job after their regular shift is completed, depending on the distance they travel to get there 

Work Hours

Most hours employees spend working away from their primary place of employment qualify for payment. Here are some concrete examples of which types of hours are generally eligible for travel pay:

• Travel time required getting to a business trip, including waiting time for planes and trains, should be compensated.
• Although employers should pick up the check for meals while an hourly employee is away on a work assignment, they are not required to pay an hourly rate for the time employees spend eating, with one major exception: if employees go out with clients or can otherwise prove the meal was work-related.
• Travel pay extends to commuting time when an employee does company work while heading to or from home, such as writing a report on the commuter train.
• Employers are required to pick up the bill for overnight stays at hotels and they must pay for the waking hours employees spend there, but they are not required to pay employees for the hours they spend sleeping in the hotel.

Pay Rate

While employers are required to pay for travel time, they don’t have to pay at the employee’s customary hourly rate. Because traveling doesn’t require the same skill level as the job for which employees were hired, travel pay doesn’t have to be compensated at their regular hourly wage. The rate can be significantly lower. In fact, many states allow travel time to be as low as minimum wage. (One caveat: Employees must be notified in advance that the hourly travel wage will be different than their normal hourly wage.) But employees who would rather not travel at all will not appreciate their pay being docked, so think twice before lowering their pay while they are traveling.

If employees' hours exceed 40 in a workweek even when they are away on a business trip, they must be paid overtime. The Fair Labor Standards Act is crystal clear about this, stating “All hourly employees no matter where they are working as their hours accrue are entitled to overtime rules and regulations.”

Because there are often different hourly rates involved, figuring travel pay for hourly employees can get downright complicated. Frequently a single trip can generate three different types of hourly wages. Employees could earn their regular hourly wages, receive travel time paid at the minimum wage, and then earn overtime pay for hours that push their workweek beyond 40 hours.

For many employers, these complicated pay scenarios prove more burdensome than simply paying travel and overtime as if the employees were at their primary workplace. Since this not only simplifies the paycheck but builds goodwill with hourly employees, it’s no wonder that many employers adopt this adage: When in doubt, choose to pay out.