Travel pay is the compensation given to an employee who travels due to work-related matters. This can include time spent travelling either by driving or flying to business meetings, training sessions, events, conferences, etc. Employers cover all the expenses like ticket costs, lodging, transportation, meals, etc.
Compensating the employee for the travel expense will boost his morale, relieves stress, and motivate him to work even harder, which in turn will increase his job satisfaction and motivation. Through this, the company can demonstrate to the employee that it values his time and can provide opportunities for him to gain exposure as a result of covering the expenses of travelling and lodging for the duration of the trip.
In this blog, we will discuss what are the federal laws that govern travel pay and what are the different types of travel pays that employers have to bear:
Regulations of FLSA, PCA, and DBRA governing travel pay are as follows:
It is under the Fair Labor Standards Act (FLSA) that the US government establishes the laws for travel pay, which provides that employers are required to pay their employees travel pay for the time that they spent on work-related matters, and that the time spent on such matters is considered as “hours worked ”.
There are various laws that govern travel pay in addition to FLSA, such as Davis-Bacon Acts and Related Acts (DBRA) which stipulate that contractors who work on federally funded projects are required to pay their workers the prevailing wage rates in the area in which the work is being carried out, as well as their travel pay.
Another example is the Walsh-Healey Public Contracts Act (PCA), which specifies that all contractors that are engaged in the manufacture or production of goods have a duty to pay their employees at prevailing rates and that these wages must also be included in their travel allowance.
The majority of states have their own laws regarding travel pay, which is perhaps a greater protection for employees than many of the federal laws. Both state and federal laws require employers to comply with both of these requirements, and they must pay their employees at the higher of the two rates, whichever is higher.
What are the different types of Travel Pay?
In terms of travel pay, there are different types of pay that can be accrued while traveling, although the costs of these are the responsibility of the company:
1. Mileage reimbursement: It is a type of travel pay in which the employer pays the employee for the miles they drive while on a business-related trip. Mileage reimbursement can vary depending on the company and the location of the trip.
2. Per diem: Employers provide employees with a daily allowance as part of their travel pay. It is designed to cover the expenses incurred on business trips, such as meals and lodging. According to company policies and the location of the trip, per diem allowances vary.
3. Travel time pay: It is a type of travel pay in which employers compensate their employees for time spent travelling to and from work. It includes driving, flying, and taking public transportation. Depending on the company’s policies, the employer may pay travel time at the employee’s regular rate or at a different rate.
4. Lodging: When an employee is travelling on business, the employer may also cover his or her lodging expenses. This can include costs associated with hotel rooms or other accommodations. Depending on the employer, lodging expenses may be governed by specific policies, such as a maximum per night amount. Further, employers may require employees to stay in certain types of accommodations.
5. Transportation: Business trips may also be reimbursed by employers. The cost of transportation can include airfare, rental cars, and other forms of transportation. Transportation expenses may be governed by specific employer policies, such as requiring that flights and rental cars be booked through a specific vendor.
6. Parking and tolls: When employees travel for business, their employers may cover parking and toll costs. For example, there are fees associated with airport parking, highway tolls, or hotel parking.
7. Baggage fees: In the event that an employee needs to check a bag while travelling for work, the employer may be responsible for covering the baggage fees. As an example, this may be a fee for checking luggage on a flight or a fee for shipping materials or equipment.
8. Visa and passport fees: It is common for employers to cover the costs of visas and passports for employees who travel internationally for work purposes. It may include fees for obtaining a visa, renewing a passport, or expediting the application process for those who need it.
Travel pay is an important form of compensation for work-related purposes. Employers should have clear policies for every kind of travel pay to ensure that employees are compensated fairly for their time and expenses while on business trips. Check out Compliance Prime to learn about how to handle travel pay in 2023 like a pro.