If your business employs hourly workers who travel for work, understanding your obligations and their legal entitlements regarding travel time pay is crucial. Both federal and state laws can govern this aspect of employment.
While exempt employees typically receive a fixed salary regardless of travel time, non-exempt employees have specific protections under the law. Employers must ensure proper travel time pay and mileage reimbursement for these workers.
This guide covers everything you need to know about travel pay for hourly employees, helping your business stay compliant and maintain fair labor practices.
What is Travel Pay?
Travel pay is the reimbursement an employer provides to an employee for work-related travel expenses. This encompasses the cost of travel itself, including:
- Airfare
- Gas
- Train fare
- Mileage
- Meals
- Accommodation
Travel pay does not cover an employee’s regular commute to and from their usual workplace.
However, emergency situations or employer-directed work-related tasks outside normal hours can blur the lines. In such instances, commuting time might be considered paid time and therefore eligible for travel pay.
How Travel Pay Works
The typical process for travel pay reimbursement unfolds as follows:
- Company Travel Policy: A company establishes a comprehensive travel policy detailing travel time pay guidelines for both hourly and salaried employees. This policy should outline the process for obtaining travel approval and provide a detailed list of reimbursable expenses.
- Employee Travel: An employee travels offsite for a work-related event, such as a conference or training course. They diligently retain receipts for all business-related expenses incurred during the trip.
- Expense Report Submission: Following the trip, the employee completes an expense report, attaching all relevant receipts and supporting documentation as specified in the company’s travel policy.
- Review and Reimbursement: The HR or finance department reviews the expense report, obtains necessary approvals, and reimburses the employee for the approved expenses.
Travel Pay vs. Break Pay vs. Mealtime Pay
It’s important to differentiate travel time from break or meal time. The U.S. Department of Labor stipulates that breaks shorter than 20 minutes, or longer breaks where the employee remains on duty, must be paid.
Comparing travel time pay, break time pay, and mealtime pay, emphasizing the differences in compensability based on work-related duties and duration.
If an employer requires an employee to travel during a scheduled break or lunch period, that travel time is considered work-related and compensable under the Department of Labor guidelines.
To avoid confusion, maintain a clear policy outlining how lunch breaks and rest periods are handled regarding pay.
Who is Entitled to Receive Travel Time Pay?
Travel time pay primarily applies to non-exempt employees. This category includes both hourly and salaried employees who do not meet the criteria for exemption under the Fair Labor Standards Act (FLSA).
Exempt employees, as defined by the FLSA, are generally not entitled to additional payment for work-related travel. These categories typically include executives, administrative staff, professionals, computer workers, and outside salespeople.
Exempt employees receive a fixed salary that compensates them for all duties, including travel, without additional travel time pay.
When Do You Have to Pay Hourly Employees for Travel Time?
Determining whether travel time is considered work time hinges on the nature of the travel itself. Below are three common scenarios related to travel pay for hourly employees. Remember that these are general guidelines; specific rules can vary based on location and applicable laws. Always consult your local jurisdiction’s regulations to ensure compliance with travel time payment requirements.
A flowchart illustrating different types of travel and their corresponding compensation rules, covering local travel, one-day assignments, and overnight travel.
Local Travel
If an employee’s job necessitates travel during their regular work hours, that time is compensable. This includes situations where they are actively working or are required to wait while traveling, even if outside normal work hours.
However, employees on breaks or with sufficient free time to pursue personal activities during travel are generally not eligible for payment during those periods.
Local Travel Example
Imagine a personal assistant, Employee A, whose duties include driving Client B around town to run errands. If this travel is part of Employee A’s job and occurs during their work hours, Employee A must be paid for the duration of that travel time.
Special One-Day Assignment to Another City
Hourly employees are typically entitled to travel pay when they undertake a one-day trip to another city for work-related activities such as conferences, training, meetings, or similar events.
You must compensate them for the travel time to and from that city. However, you can deduct the time equivalent to their normal daily commute. While some companies opt to pay for the entire commuting time, it is not legally mandated.
Special One-Day Assignment to Another City Example
Consider an employee who works in your office and is sent to a conference in another city. They travel from home to the conference location and return home on the same day. The total roundtrip travel time is two and a half hours, while their standard daily commute is only 30 minutes.
In this scenario, you can deduct the 30-minute commute and pay them for the remaining two hours of travel time.
Overnight Travel
When a non-exempt employee travels away from home and requires an overnight stay, you must count the hours they work on regular workdays, as well as any work hours on non-working days (such as weekends or holidays).
However, hourly employees traveling for work are not generally paid for travel time outside their regular work hours. The exception to this rule is if they are actively working during that travel time (e.g., responding to work emails or conducting research related to the trip).
Travel Time Pay Rate Law by State
Travel for work is subject to a variety of regulations. In some states, travel time pay rates must match the rates for regular work hours or, at minimum, meet the state’s minimum wage requirements.
However, other jurisdictions may calculate business travel compensation rates as a percentage of the employee’s standard pay rate.
California
In California, travel time exceeding an employee’s regular commute is compensable and must be paid at the agreed regular or overtime rates. While employers can set different rates for travel time, these rates must not fall below the state’s minimum wage.
New York
New York’s minimum wage regulations encompass work-related travel. Employees must be paid for travel time if it’s an integral part of their job duties.
Oregon
Oregon distinguishes between different types of work travel time, including portal-to-portal travel, travel between worksites, one-day assignments, and overnight travel. Travel time pay is generally required for all types except portal-to-portal travel (home-to-work and work-to-home).
New Jersey
New Jersey’s Wage and Hour Laws mandate fair payment for travel time. Employees required to travel between job locations as part of their work must be paid at the same rate as their regular working hours.
Maryland
A 2022 court ruling in Maryland suggests that travel time may be compensable if workers are required to report to a shuttle for transport to and from a worksite.
While explicit changes to travel time laws are pending, Maryland businesses should monitor ongoing developments that could affect their payment obligations.
Nevada
Nevada law stipulates that any travel time deemed work must be paid at least at the state’s minimum wage. Additionally, any employer-mandated training is also considered work time and must be compensated.
These are general explanations and the specific regulations may vary. It’s essential for employers and employees to familiarize themselves with their state’s specific laws to ensure compliance with travel time pay requirements.
To ensure compliance, businesses must understand the specific travel time pay regulations in their area. Employees should also be aware of their rights regarding travel time pay to guarantee fair compensation for their time spent traveling for work.
How to Calculate Work Travel Time
One of the key challenges for business owners is accurately calculating work travel time to ensure fair and correct employee paychecks.
Paying travel time for hourly employees requires accounting for various factors, including local laws and company policies. Here are some common practices:
Calculate Actual Hours
Track and pay hourly employees for the actual time they spend traveling, including commuting between job sites or client locations. Employees should be compensated at their regular hourly rate for these travel hours.
Paying at Overtime Rates
If travel time causes hourly employees to exceed their regular working hours or meet overtime criteria under applicable laws, it should be compensated at the appropriate overtime rate.
Set Flat Rates
Some employers establish fixed flat rates for travel time, paying a predetermined amount for each trip or assignment, regardless of actual hours traveled.
How Homebase Can Help Calculate Work Travel Time
To calculate work travel time accurately, you should track your employees’ hours spent traveling. While manual logging of employee travel times is possible, it can lead to costly errors. Many business owners use online timesheets to manage work travel efficiently.
Homebase, for example, is a time-tracking tool that simplifies managing travel pay and employee hours. It uses GPS to automatically track employees’ hours and locations while they’re on the move, allowing you to monitor how much time employees spend traveling for work.
Homebase offers features to streamline time tracking and invoicing, enabling you to set different pay rates for travel hours and regular work hours, simplifying payroll processes. It also helps you manage overtime pay and optimize employee routes and schedules to minimize travel time.
Travel Time Pay FAQs
How Do You Pay Travel Time for Employees?
The payment method depends on applicable laws and company policies. Common approaches include:
Paying at Regular or Overtime Rates
Travel time is often paid at the same rate as regular work hours. However, if travel time causes employees to exceed normal work hours or meets overtime criteria, it should be compensated at the appropriate overtime rate.
Different Rates for Travel Time
Some employers set specific rates for travel time, separate from regular work hours. These rates may be negotiated or agreed upon, but should not be lower than the minimum wage.
Lump Sum or Flat Rate
In certain situations, employers may provide a fixed amount as a lump sum or flat rate to cover travel time, simplifying calculations and ensuring consistent payments.
How Do You Pay Non-Exempt Employees for Travel Time?
Paying non-exempt employees for travel time requires careful consideration of legal requirements and company policies. Common practices include:
Compensate Actual Travel Hours
Track and pay non-exempt employees for the actual time they spend traveling, including time spent commuting between job sites, client locations, or other work-related destinations, at their regular hourly rate.
Apply Overtime Rates
If travel time causes non-exempt employees to exceed regular working hours or qualify for overtime under applicable laws, it should be compensated at the appropriate overtime rate.
Establish Flat Rates or Lump Sum Payments
Employers may establish fixed flat rates or provide lump sum payments for travel time, paying a predetermined amount for each trip or assignment, regardless of actual hours traveled. Ensure these rates comply with legal requirements, such as meeting or exceeding minimum wage rates.
Do Employers Have to Pay Hourly Employees for Travel Time?
The requirement depends on the specific laws in your jurisdiction and the nature of the travel. General guidelines include:
Regular Commute
Employers are typically not obligated to pay hourly employees for their regular commute from home to the workplace and vice versa. This is considered ordinary home-to-work travel and is typically not compensable.
Work-Related Travel
When hourly employees are required to travel for work-related purposes, such as visiting client locations or job sites, the travel time may need to be compensated. If the travel time exceeds the employee’s regular commute or falls under specific criteria outlined in labor laws, employers may be required to pay hourly employees for that travel time.
Travel time pay regulations can vary by jurisdiction, so consulting local labor laws and seeking legal advice is advisable.
Establishing clear travel time policies and communicating them effectively to employees can help avoid confusion and promote fair compensation practices.
Does Flight Time Count as Hours Worked?
If the purpose of a flight is to travel from one destination to another for work purposes during regular work hours, it is considered hours worked. Flight time counts as paid travel time. However, this rule may not apply in all circumstances, so it’s always best to check local laws and company policy.
Do Hourly Employees Get Paid While Traveling?
Travel time during an employee’s regular work hours is considered hours worked and therefore eligible for compensation. For example, if your work hours are 9 am-5 pm, and you travel between 11 am-4 pm, you are eligible for travel time pay.
What is Compensation Time for Travel?
Sometimes known as “comp time,” this refers to the time employees are compensated for when they travel for work, such as paying travel time or providing time off in lieu of pay.
