Travel Pay

“I have field employees but am confused about what I can or should be paying them for their travel.”

Your HR Survival Tip

A lot of companies are confused about what travel pay includes so you’re not alone. Since California has been litigating wage details more often, it is important to calculate an employee’s pay properly. Travel pay is directly related to non-exempt, hourly employees but paying for mileage affects all employees.

There are some exceptions to the following guidelines so discuss your policy with someone knowledgeable to ensure compliance:

Commuting from home to the company’s location — When an employee travels from their home to the company’s location, they are not legally eligible to be paid for their time or transportation costs. This is assuming the work location is the same every day.

Commuting from home to different work sites — When the employee’s job site moves around, such as to various customer sites, you should calculate the extra distance the employee needs to go beyond their normal commute to the company office. That extra distance is considered work time so the employee’s time and mileage should be paid.

Leaving the office to go elsewhere for work — If the employee is at work and must leave that location to go run a work-related errand or go to another job site, both their time and mileage should be paid.

Long-distance travel — Employees who need to travel a long distance for work must be compensated from the time they leave their home until they reach either the work site or lodging, whichever is first. The same concept applies when returning home.

Paying for time — When an employee is considered to be on the clock, they are paid. If the employee’s normal job isn’t as a driver, California allows you to pay minimum wage for travel time because the employee isn’t doing the work they were hired to do. You need to provide advance notice of a different pay rate for travel time and properly calculate overtime pay based on different rates throughout the workday.

Minimum wages during travel — Local minimum wage laws state you must pay the local minimum wage if your employee will be working at least 2 hours that week in that jurisdiction. That could make for some interesting calculations when it takes an employee longer than 2 hours to travel through a jurisdiction. However, since the employee won’t be performing any work while driving through and stopping for gas or breaks don’t count, you only use the minimum wage for your company office location for travel pay to and from the job site. Once your employee arrives to work at the job site, the job site’s minimum wage would apply only for time worked at the job site.

Paying for mileage — If the employee is using their personal vehicle, the company receives a benefit by not having to provide transportation and should pay for that benefit. When paying for mileage, the Internal Revenue Service (IRS) provides a standard mileage reimbursement rate that is intended to cover all the costs involved for the employee’s personal vehicle… and raises no questions.

Travel pay based on vehicle or home location — Which vehicle an employee chooses to purchase or where they decide to buy or rent a home isn’t the company’s responsibility and isn’t typically part of this discussion. However, rising gas and home prices can play a role in whether the employee is willing to make longer commutes. Companies might consider an employee’s location when hiring if you know frequent non-commute travel is part of the job.

The reason companies must pay for travel time is based on the legal definition of time worked. This is time during which the employee is subject to the control of an employer and includes all the time the employee is “suffered or permitted to work, whether or not required to do so.” Basically, if you want, expect, or even just allow your employee to work, it’s paid time.