On the road again: Compensating for business trips
After limiting business travel due to the pandemic, many employers are sending their employees to out-of-town sales meetings, conferences and training. Here are the rules of the road for compensating California employees for work-related travel.
Non-exempt employees must be compensated for travel time imposed by the employer
Employees exempt from overtime rules, such as executives, professionals, and high-level administrators, receive a fixed salary of at least twice the state minimum hourly wage to perform their duties, regardless of the time it takes. They are not entitled to additional compensation for business trips.
Under current state wage orders, non-exempt employees, whether paid by the hour or wage, are entitled to be paid for all “hours worked,” including “time during which an employee is under the control of an employer. …” This includes time spent on employer-mandated travel.
DLSE advice on work-related travel compensation
In 2002, the California Division of Labor Standards Enforcement (DLSE) issued Opinion Letter 2002.02.21, the advice of which was later incorporated into the agency’s enforcement handbook, examining the legality of an employer policy which provided that “time spent traveling as a passenger on an airplane, train, bus, car or taxi to an outside work destination [an employee’s] normal working hours are not considered paid time. The DLSE found that the policy violated California law, although it could partially fall under less stringent federal wage rules.
“Under state law, if an employer requires an employee to attend a business meeting, training session, or other out-of-town event, the employer cannot not waive the obligation to pay for the employee’s time to and from the place of work. this event. Time spent driving, or as a passenger on an airplane, train, bus, taxi or car, or any other mode of transportation, to and from this out-of-town event waiting to purchase a ticket, check baggage, or board, is, in such circumstances, time spent carrying out the employer’s instructions and can therefore only be qualified as time during which the employee is subject to the employer control. This forced travel time therefore constitutes compensable “worked hours”. »
According to the DLSE, this does not mean that every hour an employee spends on employer-required travel is compensable. “[T]time spent taking a break from travel to have a meal, sleep, or engage in purely personal activities not related to travel or necessary travel connections (such as, for example, spending an extra day in a city before departure or after the conclusion of a conference for sightseeing), is not compensable.
The employer can set a lower compensation rate for the trip before it happens
The DLSE allows an employer, by policy or contract, “to establish a separate rate for travel prior to work being performed, provided that no rate of pay may fall below the state minimum wage. Under state law, the obligation to pay at least minimum wage attaches to every hour or part of every hour worked. »
All employees shall be reimbursed for reasonably necessary work-related travel expenses
Section 2802 of the California Labor Code requires an employer to reimburse exempt and non-exempt employees for all necessary expenses incurred in connection with travel required by the employer.
Employers often reimburse employees who drive out of town for business at the mileage rate set by the US Internal Revenue Service rather than for any expenses the employee actually incurs while driving. In June, the IRS announced an unusual mid-year increase in the business mileage reimbursement rate from 58.5 cents to 62.5 cents effective July 1 through the end of the year for reflect the recent increase in fuel prices.
Limitation of the employer’s obligation to pay work-related travel expenses
Non-exempt employees must be paid for business travel that an employer requires, not business trips an employee chooses to take, such as an enrichment seminar the employee chooses to take to become a better employee. And an employer must reimburse “necessary” travel expenses, not discretionary extras like seat or room upgrades. Along with the ability to pre-set a lower rate of pay for hours spent on business travel, these limits give employers some control over their travel budgets.
Dan Eaton is a partner at the San Diego law firm Seltzer Caplan McMahon Vitek, where his practice focuses on advocacy and counsel to employers. He is also an instructor at San Diego State University’s Fowler College of Business, where he teaches courses in business ethics and labor law. He can be reached at [email protected] His Twitter account is @DanEatonlaw