When Must I Pay Employees for Travel Time?
Travel Time vs. Commuting Time
What Is Employee Travel?
In general, time spent traveling by employees for work-related activities should be paid. Travel that is incidental to the employee's duties and time spent commuting (traveling between home and work) is not paid. Travel time can include both local trips and travel away from home.
Travel Time vs. Commuting Time
Commuting is going back and forth to work. Everyone (at least everyone who doesn't work at home) commutes to a job.
Commuting time is personal time, not business time. The IRS does not allow businesses to deduct commuting time as a business expense, and employees should not be paid for the commuting time.
The Department of Labor (DOL) discusses employees who drive employer-provided vehicles. The DOL considers time spent in home-to-work travel by an employee in an employer-provided vehicle, or in activities performed by an employee that are incidental to the use of the vehicle for commuting, generally is not "hours worked" and, therefore, does not have to be paid.
Here's a possible rule of thumb: If you authorize a trip, no matter how the employee travels (car, train, bus, etc.) the travel time should be paid.
Travel Pay for Hourly Employees
Pay to employees for local travel time is only applicable to non-exempt (hourly) employees, not to exempt (professional or managerial) employees. Exempt employees are paid for their expertise by the job, not by the hour.
Travel Examples: Paid or Not Paid?
- An employee drives to work from his home every day. You ask him to stop on his way and pick up bagels for the staff meeting. This driving time is not paid. Time commuting to work is never paid time; the time to stop for the bagels is "incidental" to the commuting and is not part of the employee's job.
- You ask an employee to drive to a store on work time to get bagels for the office meeting. If the employee makes this trip during normal work hours, he or she should be paid.
- An LPN (licensed professional nurse) works for a nursing facility and travels between the two locations of this facility as directed, providing care for patients at both locations. Her daily travel time must be included in her pay because she is not commuting, but traveling between work locations.
Paying Employees for Time Spent Traveling Away from Home
Employees who travel to another location for business purposes are a different case. In general, you must pay employees for time spent that is under your control and time which they cannot spend as they wish. So if an employee travels from Cleveland to Pittsburgh for a two-day seminar at the direction of the company, some part of the employee's time should be compensated.
In the case of salaried employees, paying for travel time is not an issue, because salaried employees are paid for the job, not for hours worked. Paying for business travel time may be an issue, though, in the case of an hourly employee.
Paying for travel time for one-day or overnight stays is complicated.
Contact the nearest district office of the U.S. Department of Labor for information on specific instances of travel time that affect your business. You may also want to contact an employment attorney to discuss these issues.
Paying for Travel Expenses
In addition to paying employees for travel time, you should their expenses for travel. The Department of Labor doesn't require reimbursement for travel expenses, but it makes sense to pay employees if you require them to travel. Travel expenses are deductible to your business, and employees may deduct unreimbursed travel expenses. If employees mix business and personal travel, you need to sort out the part that is business related and pay only these expenses.
State Regulations on Paying for Employee Travel
Check with your state labor department to see if there are any rules which might supersede the federal rules.
For More Information
The Balance has some tips for reducing the cost of employee travel.
SHRM (the Society for Human Resource Management) has more information about paying employee travel time.
For more details from the IRS on employee travel time, see IRS Publication 535: Business Expenses.