Employee Time Travel

While we'd love to tell you how to help employees reach 88 mph to generate the 1.21 jigowatts needed to travel back to the future, this helpful info is more about making sure you as a small business owner pay your employees correctly for time spent traveling. We'll include a few pro tips on how to cut costs on compensable travel.

Federal law is clear about minimum pay, but not about hours for which employees must be paid. Here are some rules for when you are required to pay employees for travel time and tips on how to cut these costs:

Travel to and from a fixed place of work. You are not required to pay employees for commuting time. For example, you do not have to pay a clerk for commuting time to and from your office each day.

Travel to and from a different job site each day. You are not required to pay employees for travel time between their homes and a different job site each day—such as a plumber who goes from home to one work location one day and a different work location the next—unless your company has a contract, custom or practice of doing so.

Pro Cost Cutting Tip: If your company voluntarily pays employees for commuting time, state specifically in writing that payment for commuting time is a “commuting allowance”—i.e., not compensation for hours worked—because the company’s hourly commuting allowance may be much lower than the employee’s normal hourly rate. This frees the employer from paying its employees their normal hourly rate for travel back and forth from their homes to various job sites.

Travel to and from a designated meeting place. Employees required to report to a meeting place before going to a work site must be paid for travel time between the meeting place and work site. For example, carpenters required to report to a tool shed to pick up tools must be paid for travel time from the tool shed to the job site (but not travel time from home to the tool shed).

Pro Cost Cutting Tip: Let employees take tools and supplies home. Or, assign a crew leader to pick up tools and supplies. (AIPB tip: Regularly inventory items and consider a return-and-responsibility policy to prevent theft or loss.)

Travel to and from an employer pickup location. If you require employees to meet at a location to be driven to the job site in a company-provided vehicle, you must pay regular wages for the travel time between the pickup location and the job. For example, construction workers required to meet at a crew leader’s house to be driven to the job site must be paid for this travel time.

Pro Cost Cutting Tip: You are not required to pay employees for travel time between a pickup location and job site if they voluntarily use employer-provided transportation. Only the employee driver must be paid for this travel time.

Travel from job site to job site. You must pay employees for travel time among job sites during the work day and for travel time from the last job site to your office (or other company location) before they return home—if you require them to make this stop. For example, Bill normally works from 8-5. He is sent to a customer at 4 and finishes at 4:45, but is required to stop at his office before going home. He arrives at the office at 5:30. Bill must be paid for all hours (excluding the normal meal period) up to 5:30.

Pro Cost Cutting Tip: Let employees go directly home from the last job site. Had Bill been allowed to do this, he’d have been due wages only through 4:45.

Travel involving an overnight stay. You must pay employees for time traveled during their normal workday (excluding the normal meal period), but not for travel hours before or after the workday. You need not pay employees for travel time to the train station or airport, but you must pay them from take-off or departure until the end of the employee’s normal workday, or until the employee reaches the destination (e.g., hotel), whichever is earlier. And you must pay employees even for travel time on nonwork days. Say that Jan normally works from 7:30 a.m. to 4:30 p.m., Monday to Friday, with an hour for lunch. Saturday, she takes a 7:30 a.m. (EST) flight from New York City to Los Angeles, arriving at her hotel at 4:30 p.m. EST. You must pay her for 8 hours (9 hours – 1 hour for lunch).

Pro Cost Cutting Tip: When possible, schedule nonexempt employee travel time after normal work-day hours.

Example: If Jill needs to take a 3-hour flight to an overnight assignment, schedule her flight after normal working hours. Also, the law says that if you offer to pay for public transportation (e.g., plane fare) and employees choose to drive, you may pay for actual travel time or the time it would have taken to reach the destination on the public transportation offered. For instance, if you offer John a 2-hour flight to his job site but he decides to drive, which takes 6 hours, you may pay for the 2 hours that the flight would have taken instead of the 6 hours that it took to drive.

Travel bonuses. Some employers pay employees higher rates for travel outside normal work hours, creating an incentive to travel during off hours.

Pro Cost Cutting Tip: Have your travel-bonus policy state that the bonus is “extra compensation” (which company policy can make lower than the normal hourly rate) for additional travel required—not compensation for travel time. That way, you need not pay employees for every hour traveled after the normal work day. The “additional compensation” must be included in the employee’s normal pay rate for the week for overtime purposes, which still may be less than if the travel time was paid at the employee’s normal pay rate.

Travel in van pools. You are not required to pay employees for voluntarily traveling in an employer van pool, only the drivers—unless they volunteer, too.

Note: It is a violation of federal law to require—i.e., coerce—employees to drive “voluntarily” to avoid paying them.

Pro Cost Cutting Tip: If you have a company-provided van pool, offer it free or at a reduced rate on the condition that employees volunteer to drive, perhaps on a weekly rotation, with drivers scheduled two or three months in advance. This is an inducement, rather than coercion because employees can refuse. For federal employment tax purposes, in 2024 a company-provided van pool is tax-free up to $3 for each round-trip commute to a maximum of $315 per month.

After-hours travel assignments. If an employee has gone home for the day and is asked to travel a substantial distance for an after-hours emergency, it is classified as “unusual travel time” and must be paid as hours worked.

All paid hours spent traveling count toward overtime. There are special rules for employees who work for hospitals, nursing homes and home health-care agencies under the 8/80 rule.

For more information, read Labor Department's Pub. 1312 - Interpretative Bulletin, Part 785: Hours Worked Under the Fair Labor Standards Act of 1938, as Amended. Or read Fact Sheet 22, Hours Worked Under the Fair Labor Standards Act (FLSA).

Legal Disclaimer: This post contains general information for taxpayers and should not be relied upon as the only source of authority. Taxpayers should seek professional tax advice for more information. This information was current at time of posting; we are not responsible for updating this or any blog post/article for subsequent changes in the law or its interpretation.

Article written by by Debera J. Salam. Originally appearing in The General Ledger Vol. 41, No. 10.

Employee Time Travel

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