If you run a small business where your workers are paid by the hour but also have to travel for work, it’s important to understand what your obligations are and what your employees are legally entitled to regarding hourly employee travel time. This includes understanding federal and state laws, as travel time pay for hourly employees can be governed by both.
Exempt employees don’t have to worry about this issue as much. This is because they get a fixed amount of money in every paycheck, regardless of their travel time. However, the government sets rules for non-exempt employees that say employers must ensure travel time pay and mileage reimbursem*nt.
In this post, we’ll cover everything you need to know about travel pay for hourly employees so your business stays compliant.
What is travel pay?
Travel pay is money that an employer reimburses to an employee when traveling for work. It covers the cost of travel and related expenses, such as airfare, gas, train fare, mileage, and meals. Travel pay doesn’t cover an employee’s regular commute to and from work.
However, what about in some emergency situations, or when the employer asks the employee to do work-related tasks outside of their normal hours? In those cases, time spent commuting from home may be considered as paid time and eligible for travel pay.
How does travel pay work?
Travel pay works by providing eligible employees with reimbursem*nt for expenses during work travel. It can sometimes look like this:
- A company creates a travel policy that details travel time pay for hourly employees and salaried team members. The document should outline how employees should get approval for travel and include an in-depth list of reimbursable travel expenses.
- An employee travels offsite for a two-day course. Anytime they incur a business-related expense, they save the receipt.
- After the trip, the employee fills out an expense report and submits the receipts and any supporting documents outlined in the company travel policy.
- The expense report is reviewed by the HR or finance department, sent for approval, and the employee is reimbursed.
What’s the difference? Travel pay vs. break pay vs. mealtime pay.
It’s important to note that travel time is different from break or meal time. According to the US Department of Labor, any break less than 20 minutes or longer breaks where the employee still has work duties must be paid.
If an employee is asked by their employer to travel during a full break or lunch period, that travel time is considered work-related. In this situation, following the Department of Labor, travel time pay is required.
To avoid any confusion, it’s a good idea to have a separate policy in place that explains how lunch breaks and rest periods are handled in terms of pay.
Who is entitled to receive travel time pay?
Only certain employees, known as non-exempt employees, have the right to be paid for the time they spend traveling for work. This includes both hourly and salaried employees who fall into the non-exempt category.
On the other hand, there are exempt employees who are not entitled to payment for work-related travel. Hourly employee travel pay does not apply to exempt employees.
In the United States, the Fair Labor Standards Act (FLSA) identifies different types of exempt employees, like executives, administrative staff, professionals, computer workers, and outside salespeople.
These exempt employees don’t get paid specifically for their travel time since they receive a fixed salary regardless of their travel obligations.
Do you have to pay hourly employees for travel time? Here’s when.
So is travel time considered work time? It depends on the travel. Here are three common situations regarding travel pay for hourly employees. It’s important to note that these are general guidelines. Specific rules may vary depending on the location and applicable laws.
You should familiarize yourself with your jurisdiction’s regulations to ensure compliance with travel time payment requirements.
Local travel.
If an employee’s job requires them to travel within their regular work hours, they must be paid for that time. This includes situations where they are engaged in work or waiting while traveling, even if it’s outside their normal work hours.
However, employees who are on breaks or have enough time to do personal things are not eligible for payment during those periods.
Local travel example.
Employee A is a personal assistant who drives Client B, around town to run errands. If this travel is part of Employee A’s job duties and occurs during their work hours, Employee A must be paid for that time.
Special one-day assignment to another city.
Paying hourly employees for out of town travel can occur if an individual has to make a one-day trip to another city for work-related activities like conferences, classes, meetings, or similar events.
You must pay them for the travel time to and from that city. However, you can deduct the time they would normally spend on their regular commute. Some businesses choose to pay for the entire commuting time, but it’s not mandatory.
Special one-day assignment to another city example.
Let’s say your employee works in your office and you send them to a conference. They travels from their home to the conference location and return on the same day. The roundtrip takes them two and a half hours, while their regular daily commute is only 30 minutes.
In this case, you can deduct the 30-minute commute and pay them for two hours of travel time.
Overnight travel.
Is a non-exempt employee traveling away from home and staying overnight? Then you must count the hours they work on regular working days, as well as work hours on non-working days (like weekends or holidays).
However, hourly employees traveling for work don’t need to be paid for travel time that falls outside their regular work hours. The exception is if they are working during that travel time (e.g., answering work emails or doing research on a work trip).
Travel time pay rate law by state.
There are various laws regarding travel for work. In some states, travel time pay rates must be the same as the rates for regular working hours, or they need to meet the minimum wage requirements at least.
However, in other cases, business travel compensation rates might be calculated as a percentage of the employee’s normal pay rate.
California
In California, any travel time that exceeds an employee’s regular daily commute is considered compensable and must be paid at the agreed regular or overtime rates. Employers can set different rates for travel time, but they cannot be lower than the minimum wage.
New York
In New York, the minimum wage regulations cover work-related travel. Employees must be paid for travel time if it is part of their job duties.
Oregon
Oregon has different classifications for work travel time: portal-to-portal travel, travel between worksites, travel on special one-day assignments, and overnight travel. Generally, travel time pay is required for all types except portal-to-portal travel (home-to-work and work-to-home).
New Jersey
In New Jersey, the Wage and Hour Laws ensure fair payment for travel time. When employees are required to travel between job locations as part of their work, they must be paid at the same rate as regular working hours.
Maryland
In Maryland, a 2022 court ruling has indicated that travel time may need to be paid if workers are required to report to a shuttle that takes them to and from a work site.
While laws addressing travel time have not yet been explicitly changed, small business owners in Maryland should stay aware of ongoing developments which may affect their payment obligations..
Nevada
Nevada law states that any travel time considered as work should be paid at least at minimum wage rates. Additionally, any training requested by the employer must also be paid as it is considered work time.
Remember, these are general explanations, and specific regulations may vary. It’s essential for employers and employees to familiarize themselves with the specific laws in their state to ensure compliance with travel time pay requirements.
To make sure your business is following the rules, it’s important for you to understand the specific regulations about travel time pay in your area. Likewise, employees should be aware of their rights regarding travel time pay. They need to ensure they receive fair compensation for the time they spend traveling for work.
How to calculate work travel time.
One of the big challenges for business owners? Figuring out how to pay hourly employees for travel time accurately and ensure that employees’ paychecks are fair and calculated correctly.
Paying travel time for hourly employees involves considering various factors, such as the specific laws in your jurisdiction and your company’s policies. Here are some common practices:
Calculate actual hours.
One approach is to track and pay hourly employees for the actual time spent traveling. This includes the time spent 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 the travel time causes hourly employees to exceed their regular working hours or if it falls under overtime criteria based on applicable laws, it should be compensated at the appropriate overtime rate.
Set flat rates.
Some employers choose to establish fixed flat rates for travel time. This means paying a predetermined amount for each trip or assignment, regardless of the actual hours traveled.
How Homebase can help calculate work travel time.
Now you know that to calculate work travel time, you should find a way to track your employees’ hours spent traveling. You can manually log employee travel times, including start time, end time, destination, expenses, and so forth in a document. One warning: manual tracking can result in costly errors. This is why many business owners use online timesheets to manage work travel.
For example, Homebase is a time-tracking tool that makes managing travel pay and employee hours much more straightforward. The tool automatically tracks employees’ hours and locations while they’re on the move using GPS. This means you can keep track of how much time your employees spend traveling for work.
Homebase also has features to streamline time tracking and invoicing. You can set different pay rates for travel hours and regular work hours, helping you streamline payroll. It also helps you handle overtime pay and helps you plan employee routes and schedules to optimize travel time.
Sign up to Homebase today to manage travel time pay for hourly employees with ease. Free trial for 14 days.
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