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The key to identifying whether travel time during the workday is compensable is determining whether the employees are engaged in travel as part of the employer's principal activity or for the convenience of the employer. Whether time spent traveling is paid work time for nonexempt employees depends on the type of travel involved. Travel time that is work time is subject to both the minimum wage and overtime pay requirements of the Fair Labor Standards Act.
The Portal-to-Portal Act provides that traveling to and from where work is performed at the beginning and end of the workday is not work time (29 USC 251 to 262). Other travel time associated with an individual's performance of his or her job is paid work time. This seems like a simple distinction, but in fact, there are many cloudy areas, some of which are clarified in regulations issued by the Wage and Hour Division of the U.S. Department of Labor (DOL) (29 CFR 785.33 to 785.41).
Normal travel from home to work is not work time. This is true whether the employee works at a fixed location or at different jobsites (29 CFR 785.35). Commuting includes the time spent walking from the parking lot to the worksite. If an employee has to report to a central meeting site to pick up equipment, supplies, an itinerary, instructions, or coworkers, work time starts at that location.
When an employee has gone home after completing his or her day's work and is subsequently called out at night to travel a substantial distance to perform an emergency job for one of the employer's customers, all time spent traveling is work time (29 CFR 785.36). However, the Wage and Hour Division has not addressed whether travel to and from the regular workplace in an emergency after hours is work time.
Remember: Travel time wages paid by an employer for calling an employee back to work must be included in the calculations of hours worked for purposes of paying overtime.
The Portal-to-Portal Act provides that travel between home and work in a company-owned vehicle is not paid work time as long as the travel is within the normal commuting area for the employer's business, and the use of the vehicle is subject to an agreement between the employer and the employee or the employee's representative (29 USC 254(a)). This exception also applies to time spent in activities incidental to the use of the vehicle for commuting (such as stopping for gas).
According to Chapter 31 of the DOL Field Operations Handbook, in certain situations, an employee is responsible for a vehicle, its equipment, and having it at the worksite at a proper time. If the employer permits the employee to drive the vehicle to and from work for the employee's benefit, this driving time would not be considered compensable travel time. This includes when the employee elects to transport other employees to and from work in the vehicle. Where the vehicle is also used for emergency calls outside regular working hours, a determination would have to be made as to whether the vehicle was being used primarily for the benefit of the employer or the employee. The frequency of the emergency calls would be one factor considered.
According to a DOL opinion letter, commuting time in the employer's vehicle is not paid work time if:
• Commuting in the employer's vehicle is strictly voluntary and not a condition of employment;
• The vehicle involved is the type of vehicle that would normally be used for commuting, such as a bus, 10-wheel dump truck, trailer/tractor rig, truck-mounted crane, or oil well drilling equipment;
• The employee incurs no costs for driving the employer's vehicle or parking it at the employee's home or elsewhere; and
• The worksites are within the normal commuting area of the employer's establishment.
To protect against liability, employers should require employees who are expected to use their personal vehicles for company business to show proof of current insurance coverage. Employers should also include a “nonownership automobile liability insurance policy” as part of their own insurance coverage. This will provide insurance protection against claims for bodily injury and property damage, as well as costs for investigations and court proceedings that might result from work-related accidents.
When an employee who regularly works at a fixed location in one city is given a special 1-day assignment in another city, much of the time spent traveling is work time and must be compensated. For example, an employee who works in Washington, D.C., with regular work hours from 9 a.m. to 5 p.m., is given a special assignment in New York City, with instruction to leave Washington at 8 a.m. She arrives in New York at noon, ready for work. The special assignment is completed at 3 p.m., and the employee arrives back in Washington at 7 p.m. Such travel is not regarded as ordinary home-to-work travel and must be compensated. It was performed for the employer's benefit and at its special request to meet the needs of a particular and unusual assignment. Therefore, it would qualify as an integral part of the principal activity that the employee was hired to perform.
All the time involved, however, need not be counted. Except for the special assignment, the employee would have had to report to her regular worksite. The travel time between her home and the railroad station need not be compensated. Also, the usual mealtime need not be paid (29 CFR 785.37).
Employers may agree to pay for ordinary commuting time. However, such time does not have to be counted as hours worked and is not subject to the minimum wage and overtime requirements.
Homeworkers must be paid for time spent traveling to and from the distribution point to pick up or deliver the homeworker's own work or the work of other homeworkers. Where the travel includes time spent in personal activities, such as shopping or going to the post office, this personal travel time need not be included in counting the hours worked.
Time that an employee spends traveling as part of his or her principal activity, such as travel from jobsite to jobsite during the workday, must be counted as hours worked. Where an employee is required to report at a meeting place to receive instructions, pick up tools, or to perform other work there, the travel from the designated place to the workplace is part of the day's work and must be counted as hours worked, regardless of contract or custom (29 CFR 785.38).
For example, if an employee normally finishes his work on the premises at 5 p.m. and is sent to another job, which he finishes at 8 p.m., and is required to return to his employer's premises, arriving at 9 p.m., all of the time is work time. However, if the employee goes home instead of returning to his employer's premises, the travel after 8 p.m. is home-to-work travel and is not hours worked.
Travel that keeps an employee away from home overnight is designated as “travel away from home” by the Wage and Hour Division regulations (29 CFR 785.39). Travel away from home is paid work time when it “cuts across the employee's workday.” This is because the employee is deemed to be simply substituting travel for other duties. The time is not only hours worked on regular workdays during normal work hours but also during the corresponding hours on nonwork days. The Wage and Hour Division, however, does not consider time spent traveling away from home outside of regular working hours as a passenger on a plane, train, boat, or bus as paid work time.
If an employee regularly works from 9 a.m. to 5 p.m. from Monday through Friday, the travel time during these hours is work time on Saturday and Sunday as well as on the other days. Regular meal period time is not counted as work time. For example, if an employee who normally works 9 a.m. to 5 p.m. from Monday through Friday is a passenger on a plane departing for San Francisco at 9 a.m. on a Saturday, his time spent traveling is work time because it cuts across his normal working hours. It does not matter that Saturday is not a normal workday. However, if the plane departed at 6 p.m. instead, his travel time would not be counted as paid work time because he would be traveling outside of normal working hours.
When private automobile is used. If an employee is offered public transportation but requests permission to drive his or her car instead, the employer may count as hours worked either the time spent driving the car or the time it would have had to count as hours worked if the employee had used the public transportation (29 CFR Sec. 785.40). For example, if an employee chooses to drive her car to Philadelphia, a 6-hour trip, instead of taking the train, which takes just 4 hours, the employer may treat as work time either 4 hours or 6 hours. Employees who are expected to use their personal vehicles for company business should be required to show proof of insurance coverage and to keep accurate and detailed records (time, date, duration, purpose).
If an employee is required to drive his or her car, the employer must count all time spent en route as hours worked, regardless of whether or not the hours were normal working hours.
Technicians paid on an hourly rate with no normal work hours. When an employer claims that there is no regular workday, the DOL generally finds that “a review of employees’ time records usually reveals work patterns sufficient to establish regular work hours.” Nonetheless, the DOL does state that, occasionally, there are employees who have no regular workday. If this is the case, there are a few ways to ascertain what travel time is compensable. The first “method is to review the employee’s time records during the most recent month of regular employment. If the records reveal typical work hours, the employer may consider those as the normal hours going forward unless some subsequent material change in circumstances indicates the normal hours have changed.” If the review of 1 month’s records “do not reveal any normal working hours, the employer may instead choose the average start and end times for the employee’s workdays.” Alternatively, when there are “truly” no normal work hours, and the DOL warns this situation is rare, the employer and employee may negotiate and agree to a reasonable amount of time “in which travel outside of employees’ home communities is compensable.” These three options for determining compensable travel time when an employee has no normal working hours or when the employee’s normal working hours are difficult to ascertain should assist employers in such unusual situations.
Any work that an employee is required to perform while traveling must, of course, be counted as hours worked. An employee who drives a truck, bus, car, boat, or airplane, or an employee who is required to ride as an assistant or helper, is working while riding. But the employer need not pay for meal periods or time when the employee is permitted to sleep in adequate facilities furnished by the employer (29 CFR 785.41).
Most employers reimburse their employees for work-related use of their own cars at or near the mileage rate set each year by the Internal Revenue Service (IRS). Use of an amount at or below the IRS rate eliminates the need to maintain extensive records in order to exclude the reimbursement from employees' taxable income. Employees still have to provide specific information about the business use of their cars. For employees who use their own cars extensively, more complex reimbursement programs may be implemented to encourage cost reductions. Employers should require employees who use their own cars for business to provide proof of insurance coverage.
Mileage reimbursement. The standard mileage reimbursement rate, effective January 1, 2018, is 54.5 cents per mile for all business miles driven. The standard mileage reimbursement rate is 18 cents per mile for medical or moving purposes and 14 cents per mile for service of charitable organizations. Employers that use the IRS rate or a lower rate may deduct the reimbursement as a business expense, and the payment need not be included in the employee's income. If the approved rate (or a lower rate) is used, the IRS considers that requirements to substantiate and adequately account for the expense are satisfied without extensive documentation of actual expenses. The employer may deduct reimbursements at a higher rate but only if the reimbursements reflect the actual cost of the travel and only if the employer keeps adequate records to substantiate its outlays. Reimbursements for tolls, parking, etc., may be deducted in addition to the mileage allowance. The business mileage rate increased 1 cent per mile, and the medical and moving expense rates increased 1 cent per mile from 2017. The charitable rate is set by statute and remains unchanged. The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs. Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
Company cars. The IRS also requires employees to report as earned income the value of their personal use of company automobiles. The government publishes an Annual Lease Value Table for the calculation of this sum, which can be obtained from the IRS. Social Security tax on this value must be withheld, but not federal income tax, if employees are notified of their potential tax liability.
Recordkeeping. Although the IRS does not presently require businesses to keep contemporaneous logs listing the details of every mile of business travel, employers should require employees who use personal cars for business to keep records of whom they went to see, when (time, date, and duration), and for what purpose, as well as the mileage and related expenses that were incurred. Organizations should have a statement of policy that includes those recordkeeping procedures, how reimbursement will be made, and a notice that reimbursements will only be made for company business.
Cost reduction. When employees use personal automobiles extensively for business purposes, the company might set up various mileage allowances to allow for differences in car makes and miles driven. Variable reimbursement rates are more complicated to administer but will more accurately reflect the actual cost of operation of particular employees' cars and could substantially reduce the amount spent reimbursing employees for the use of their cars.
Last updated on June 20, 2018.
Related Topics:
National
The key to identifying whether travel time during the workday is compensable is determining whether the employees are engaged in travel as part of the employer's principal activity or for the convenience of the employer. Whether time spent traveling is paid work time for nonexempt employees depends on the type of travel involved. Travel time that is work time is subject to both the minimum wage and overtime pay requirements of the Fair Labor Standards Act.
The Portal-to-Portal Act provides that traveling to and from where work is performed at the beginning and end of the workday is not work time (29 USC 251 to 262). Other travel time associated with an individual's performance of his or her job is paid work time. This seems like a simple distinction, but in fact, there are many cloudy areas, some of which are clarified in regulations issued by the Wage and Hour Division of the U.S. Department of Labor (DOL) (29 CFR 785.33 to 785.41).
Normal travel from home to work is not work time. This is true whether the employee works at a fixed location or at different jobsites (29 CFR 785.35). Commuting includes the time spent walking from the parking lot to the worksite. If an employee has to report to a central meeting site to pick up equipment, supplies, an itinerary, instructions, or coworkers, work time starts at that location.
When an employee has gone home after completing his or her day's work and is subsequently called out at night to travel a substantial distance to perform an emergency job for one of the employer's customers, all time spent traveling is work time (29 CFR 785.36). However, the Wage and Hour Division has not addressed whether travel to and from the regular workplace in an emergency after hours is work time.
Remember: Travel time wages paid by an employer for calling an employee back to work must be included in the calculations of hours worked for purposes of paying overtime.
The Portal-to-Portal Act provides that travel between home and work in a company-owned vehicle is not paid work time as long as the travel is within the normal commuting area for the employer's business, and the use of the vehicle is subject to an agreement between the employer and the employee or the employee's representative (29 USC 254(a)). This exception also applies to time spent in activities incidental to the use of the vehicle for commuting (such as stopping for gas).
According to Chapter 31 of the DOL Field Operations Handbook, in certain situations, an employee is responsible for a vehicle, its equipment, and having it at the worksite at a proper time. If the employer permits the employee to drive the vehicle to and from work for the employee's benefit, this driving time would not be considered compensable travel time. This includes when the employee elects to transport other employees to and from work in the vehicle. Where the vehicle is also used for emergency calls outside regular working hours, a determination would have to be made as to whether the vehicle was being used primarily for the benefit of the employer or the employee. The frequency of the emergency calls would be one factor considered.
According to a DOL opinion letter, commuting time in the employer's vehicle is not paid work time if:
• Commuting in the employer's vehicle is strictly voluntary and not a condition of employment;
• The vehicle involved is the type of vehicle that would normally be used for commuting, such as a bus, 10-wheel dump truck, trailer/tractor rig, truck-mounted crane, or oil well drilling equipment;
• The employee incurs no costs for driving the employer's vehicle or parking it at the employee's home or elsewhere; and
• The worksites are within the normal commuting area of the employer's establishment.
To protect against liability, employers should require employees who are expected to use their personal vehicles for company business to show proof of current insurance coverage. Employers should also include a “nonownership automobile liability insurance policy” as part of their own insurance coverage. This will provide insurance protection against claims for bodily injury and property damage, as well as costs for investigations and court proceedings that might result from work-related accidents.
When an employee who regularly works at a fixed location in one city is given a special 1-day assignment in another city, much of the time spent traveling is work time and must be compensated. For example, an employee who works in Washington, D.C., with regular work hours from 9 a.m. to 5 p.m., is given a special assignment in New York City, with instruction to leave Washington at 8 a.m. She arrives in New York at noon, ready for work. The special assignment is completed at 3 p.m., and the employee arrives back in Washington at 7 p.m. Such travel is not regarded as ordinary home-to-work travel and must be compensated. It was performed for the employer's benefit and at its special request to meet the needs of a particular and unusual assignment. Therefore, it would qualify as an integral part of the principal activity that the employee was hired to perform.
All the time involved, however, need not be counted. Except for the special assignment, the employee would have had to report to her regular worksite. The travel time between her home and the railroad station need not be compensated. Also, the usual mealtime need not be paid (29 CFR 785.37).
Employers may agree to pay for ordinary commuting time. However, such time does not have to be counted as hours worked and is not subject to the minimum wage and overtime requirements.
Homeworkers must be paid for time spent traveling to and from the distribution point to pick up or deliver the homeworker's own work or the work of other homeworkers. Where the travel includes time spent in personal activities, such as shopping or going to the post office, this personal travel time need not be included in counting the hours worked.
Time that an employee spends traveling as part of his or her principal activity, such as travel from jobsite to jobsite during the workday, must be counted as hours worked. Where an employee is required to report at a meeting place to receive instructions, pick up tools, or to perform other work there, the travel from the designated place to the workplace is part of the day's work and must be counted as hours worked, regardless of contract or custom (29 CFR 785.38).
For example, if an employee normally finishes his work on the premises at 5 p.m. and is sent to another job, which he finishes at 8 p.m., and is required to return to his employer's premises, arriving at 9 p.m., all of the time is work time. However, if the employee goes home instead of returning to his employer's premises, the travel after 8 p.m. is home-to-work travel and is not hours worked.
Travel that keeps an employee away from home overnight is designated as “travel away from home” by the Wage and Hour Division regulations (29 CFR 785.39). Travel away from home is paid work time when it “cuts across the employee's workday.” This is because the employee is deemed to be simply substituting travel for other duties. The time is not only hours worked on regular workdays during normal work hours but also during the corresponding hours on nonwork days. The Wage and Hour Division, however, does not consider time spent traveling away from home outside of regular working hours as a passenger on a plane, train, boat, or bus as paid work time.
If an employee regularly works from 9 a.m. to 5 p.m. from Monday through Friday, the travel time during these hours is work time on Saturday and Sunday as well as on the other days. Regular meal period time is not counted as work time. For example, if an employee who normally works 9 a.m. to 5 p.m. from Monday through Friday is a passenger on a plane departing for San Francisco at 9 a.m. on a Saturday, his time spent traveling is work time because it cuts across his normal working hours. It does not matter that Saturday is not a normal workday. However, if the plane departed at 6 p.m. instead, his travel time would not be counted as paid work time because he would be traveling outside of normal working hours.
When private automobile is used. If an employee is offered public transportation but requests permission to drive his or her car instead, the employer may count as hours worked either the time spent driving the car or the time it would have had to count as hours worked if the employee had used the public transportation (29 CFR Sec. 785.40). For example, if an employee chooses to drive her car to Philadelphia, a 6-hour trip, instead of taking the train, which takes just 4 hours, the employer may treat as work time either 4 hours or 6 hours. Employees who are expected to use their personal vehicles for company business should be required to show proof of insurance coverage and to keep accurate and detailed records (time, date, duration, purpose).
If an employee is required to drive his or her car, the employer must count all time spent en route as hours worked, regardless of whether or not the hours were normal working hours.
Technicians paid on an hourly rate with no normal work hours. When an employer claims that there is no regular workday, the DOL generally finds that “a review of employees’ time records usually reveals work patterns sufficient to establish regular work hours.” Nonetheless, the DOL does state that, occasionally, there are employees who have no regular workday. If this is the case, there are a few ways to ascertain what travel time is compensable. The first “method is to review the employee’s time records during the most recent month of regular employment. If the records reveal typical work hours, the employer may consider those as the normal hours going forward unless some subsequent material change in circumstances indicates the normal hours have changed.” If the review of 1 month’s records “do not reveal any normal working hours, the employer may instead choose the average start and end times for the employee’s workdays.” Alternatively, when there are “truly” no normal work hours, and the DOL warns this situation is rare, the employer and employee may negotiate and agree to a reasonable amount of time “in which travel outside of employees’ home communities is compensable.” These three options for determining compensable travel time when an employee has no normal working hours or when the employee’s normal working hours are difficult to ascertain should assist employers in such unusual situations.
Any work that an employee is required to perform while traveling must, of course, be counted as hours worked. An employee who drives a truck, bus, car, boat, or airplane, or an employee who is required to ride as an assistant or helper, is working while riding. But the employer need not pay for meal periods or time when the employee is permitted to sleep in adequate facilities furnished by the employer (29 CFR 785.41).
Most employers reimburse their employees for work-related use of their own cars at or near the mileage rate set each year by the Internal Revenue Service (IRS). Use of an amount at or below the IRS rate eliminates the need to maintain extensive records in order to exclude the reimbursement from employees' taxable income. Employees still have to provide specific information about the business use of their cars. For employees who use their own cars extensively, more complex reimbursement programs may be implemented to encourage cost reductions. Employers should require employees who use their own cars for business to provide proof of insurance coverage.
Mileage reimbursement. The standard mileage reimbursement rate, effective January 1, 2018, is 54.5 cents per mile for all business miles driven. The standard mileage reimbursement rate is 18 cents per mile for medical or moving purposes and 14 cents per mile for service of charitable organizations. Employers that use the IRS rate or a lower rate may deduct the reimbursement as a business expense, and the payment need not be included in the employee's income. If the approved rate (or a lower rate) is used, the IRS considers that requirements to substantiate and adequately account for the expense are satisfied without extensive documentation of actual expenses. The employer may deduct reimbursements at a higher rate but only if the reimbursements reflect the actual cost of the travel and only if the employer keeps adequate records to substantiate its outlays. Reimbursements for tolls, parking, etc., may be deducted in addition to the mileage allowance. The business mileage rate increased 1 cent per mile, and the medical and moving expense rates increased 1 cent per mile from 2017. The charitable rate is set by statute and remains unchanged. The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs. Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
Company cars. The IRS also requires employees to report as earned income the value of their personal use of company automobiles. The government publishes an Annual Lease Value Table for the calculation of this sum, which can be obtained from the IRS. Social Security tax on this value must be withheld, but not federal income tax, if employees are notified of their potential tax liability.
Recordkeeping. Although the IRS does not presently require businesses to keep contemporaneous logs listing the details of every mile of business travel, employers should require employees who use personal cars for business to keep records of whom they went to see, when (time, date, and duration), and for what purpose, as well as the mileage and related expenses that were incurred. Organizations should have a statement of policy that includes those recordkeeping procedures, how reimbursement will be made, and a notice that reimbursements will only be made for company business.
Cost reduction. When employees use personal automobiles extensively for business purposes, the company might set up various mileage allowances to allow for differences in car makes and miles driven. Variable reimbursement rates are more complicated to administer but will more accurately reflect the actual cost of operation of particular employees' cars and could substantially reduce the amount spent reimbursing employees for the use of their cars.
Last updated on June 20, 2018.
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