Whether you are a frequent corporate traveler or a travel manager, you will be acutely aware of the amount of travel time that can rack up. But what constitutes travel time, and what is exempt or regarded as commuting? It can be a minefield to navigate so many possible scenarios both as an employer and an employee.
Plus, the legislation regarding what should count as compensable work time varies between locations. To try and break it down, we run through the most common questions asked by business travelers and travel managers.
What counts as commuting vs. compensable travel time?
Businesses define commuting as an employee's journey to and from their home to their usual place of work. As companies cannot deduct any expenses incurred from commuting with the IRS, as a general rule, the expectation is that organizations do not need to support their staff with their commuting time. However, there are exemptions.
- If an employee has to come to the office outside of their usual working hours to handle an emergency, the employer must cover overtime pay and expenses.
- If employees are required to take group transportation from one work location to another job site, this time must be paid for or fall under their usual work hours.
What is incidental time?
An example of incidental time is asking an employee to pick up business-related supplies on their way into the office. In this scenario, the extra time incurred would be considered incidental and classed under commute time. As such, it would technically not need to be covered by the company.
However, it is worth bearing in mind that if the employee conducts this same task during a typical day's work, they would be entitled to their regular pay, and therefore this shouldn't be a frequent request from employers.
How does the duration of your business trip affect travel time?
After establishing a clear distinction between hours spent commuting and travel time, there are still further considerations worth noting regarding the duration of employee travel.
Day business trips
Even if a business trip is a one-day assignment, travel time still needs to be reimbursed. However, you can deduct the time an employee takes to get to the airport, train station, or another transportation hub from the total. This rule applies even if the journey is longer than their usual to-work travel.
For example, San Francisco based employee Megan is traveling to the Los Angeles office for a day to attend a series of meetings. Megan leaves her house at 5 am to catch a flight and returns home at 10 pm that evening. Megan's commute is 30 minutes on a normal workday, but getting to the airport is an hour-long cab ride. Megan would need reimbursing for the extra hours she was flying to and from Los Angeles but not for the extra hour the cab rides added to her normal commute.
Overnight business trips
If the business trip involves one or several overnight stays, different regulations will apply. Companies asking corporate travelers to conduct overnight travel should ensure they pay for any time spent traveling during their regular work hours regardless of the day of the week they occur. This rule also applies if your staff travel over a national holiday. However, time outside their usual workday does not need reimbursing.
For example, Michelle, whose usual full-time work hours are 9 am to 5 pm. Michelle is asked to take an overnight trip to attend a conference and leaves the office at 1 pm on Thursday to catch her flight. She attends the seminar on Friday and returns on a Saturday, getting home at 5 pm. Michelle would be entitled to pay for the four hours on Thursday that were within her usual hours of work and a full day's pay for Saturday, including the time spent in the air. However, she would not be entitled to any reimbursement for the extra travel time she incurred on Thursday.
What extra considerations are there when it comes to travel time pay?
Peripatetic workers such as traveling salespeople or consultants will naturally spend many hours on the road. While the time they spend traveling is considered part of the job and covered by the company, the time spent getting to their first appointment or worksite and returning home is considered commuting.
For example, Marcus works as a traveling salesperson. He has an appointment at 9 am to check in with an established client. After this appointment, he drives to further meetings with new leads for the business. It takes him a little longer than usual to drive home as the last appointment is a bit further away than most clients.
The time Marcus spends traveling to these meetings is considered part of his role and regular working hours. Getting to the first appointment and home from the last is classed as commuting, regardless of distance.
Depending on your location, legally, you might not be required to reimburse your staff for their travel expenses. As an organization, it's important to remember that when they travel away for business, they put their lives on hold.
Even the extra hours on their regular commute for a special one-day assignment is time away from loved ones and added pressure on significant others when it comes to childcare. Refusing to cover reasonable business travel expenses can easily lead to poor staff retention, especially as in many countries these are tax-deductible.
Establishing a clear per diem structure for travel expenses or even an allowance for a company vehicle can go a long way towards retaining top talent. Some organizations further demonstrate their appreciation by allowing employees to mix their work-related travel with a vacation.
In these instances, there needs to be a clear disclaimer agreed by all parties that travelers will not submit any costs incurred outside their working days as expenses.
Separate State Legislature
In addition to the federal legislature, US organizations will also need to consider state laws. In some instances, state guidelines can even override federal laws, so it's crucial to determine what regulations you need to follow. Your local U.S. department of labor office can highlight any rules that you might need to consider. It might also pay to hire an attorney with experience in employment law to ensure you are fully compliant as an organization.
If you are an international organization, the rules and regulations around travel time vary between countries. For example, in the UK, the employer establishes what constitutes covered travel time for their staff in the contract. Plus, many organizations will offer time off in lieu rather than financial compensation for overtime.
It is still commonplace for commuting not to be covered for office-based workers, but peripatetic workers or those applying for remote work will want this ironed out before accepting a role. Companies might even lose their dream hire if they don't include transparent and reasonable policies on travel time.
At TravelPerk, we designed our all-in-one platform with business travelers in mind. Our automated approvals systems allow corporate travelers to enjoy autonomy over their arrangements while ensuring complete compliance with your staff travel policy and procedure. If you would like to see how TravelPerk can streamline your organization's corporate travel, reach out to our team for a demonstration.
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