Employee Travel – When Do You Need a Travel Policy
Employee travel can get a little complicated if you don’t have clear policies in place. By law, employers need to reimburse employees for business expenses, including incurred during the course of employment. There are multiple variables involved with employee travel, and major differences between local worksite travel, and long-distance travel so setting up these policies requires separate approaches.
Project based employee travel, like construction or general field workers that drive from home straight to a worksite requires a detailed strategy to incorporate what would be a normal commute. Long distance travel involves pre-planning as to when the employee will be travelling and how their expenses will be managed while traveling. Lets break it all down.
Project Based Local Travel
For project-based employees, if they are required to report to the office and perform work or pick up material there, before traveling, their compensable time begins when they arrive at the office, and then continues as they travel to their project location.
For employees that typically work offsite and do not report to a main location first before heading to a remote site, should not be compensated for that travel time or mileage from their home to the remote location.
However, if the remote site is a considerable distance away, reasonably speaking, 60 or 90 miles or more, it may be best to compensate once the mileage or time exceeds 60 miles, or one hour, which is considered a normal commute time. You may set that threshold higher or lower depending again, on what is “reasonable” in your situation. Just be sure you can back up your reasoning.
Overnight travel
If air travel is required, you must pay the employee (subtracting their usual commute time) from the time they leave their house until they reach their destination, or until they no longer perform work (e.g., they have checked into the hotel). If they are free to do what they choose — sightsee, etc. — your obligation to pay ends. If they go straight to a client or conference, you continue to pay them while working.
If employees travel occurs during normal working hours, you should pay them their normal pay. If they travel on a weekend or outside normal business working hours, you do have the option of setting up separate travel pay which might be at or just above minimum wage or some other reasonable level of pay.
Overtime is an issue as well so be cognizant of travel times and other working hours. Just be sure to have a detailed Travel Policy in writing before employees begin to travel. Keep in mind, overtime pay will need to be paid either at the higher wage level, or by averaging the pay rate for all hours worked and paying the extra overtime at the average rate.
Expense Reimbursement
Expenses incurred by an employee during travel or any course of business are generally reimbursable by the company and can be structured in several forms. Mileage may be paid at a per mile rate, based on the IRS annual rate (currently $ 0.58 cents per mile for 2019), or as a reimbursable amount based on actual expense.
For the mileage rate method, employees should complete a mileage log showing to and from locations, mileage and start/finish mileage, as well as the purpose of their travel. If it is project-based travel as described above, again, the first 60-90 miles or other reasonable distance from home does not require mileage reimbursement, but mileage between worksites does.
Another travel-based reimbursement option is per diem pay which provides a flat amount per day the company will provide for incidental expenses while traveling, and then require the employee to pay anything over and above that amount. Be sure to get receipts for your tax records.
If you have any questions, please contact your HR representative at Infinium HR Group or email us at info@infiniumhr.com