Payroll Management

Travel Expenses: Is Your Mileage Adding Up?

Mar 22, 2017

Here at HireLevel, we all strive to go that “extra mile.” Whether it is in sales, customer service, candidate relations, client outreach, or literally driving that extra mile we strive to be a top ranked employment agency and payroll services for our clients. So how does that literal extra mile add up, and how do we as an employment agency stay in compliance?

V17A2604-2-1024x538 Travel Expenses: Is Your Mileage Adding Up?

The IRS defines travel pay as “time spent traveling during normal work hours and should be considered time worked and the employee should be compensated. Time spent in home-to-work travel by an employee in an employer-provided vehicle, or in activities performed by an employee that are incidental to the use of the vehicle for commuting, generally is not ‘hours worked’ and, therefore, does not have to be paid. This provision applies only if 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.”(www.irs.gov)

The current 2017 rate per mile is $0.535. There are a few principles you can apply when trying to determine if that extra mile should be compensated beyond their normal rate of pay. So when does an employer actually have to pay this to their employee? Is it actually WORKED time?

As an employment agency, we understand the importance of time paid to our candidates, especially to the millennials who are taking over the workforce. It’s extremely important for us as recruitment specialists to know the guidelines and rules to staying in compliance on employment regulations.

Here’s what you need to know when you have employee’s going that “extra mile:” 

  1. Traveling from home to work or work to home is NOT time worked – if it is to their usual “home office” they typically work in. But, if you send an employee to another location just for a day and they return home in the same day, then this is considered time worked. An employer may calculate the normal time it takes the employee to get from their home to their main office and deduct it from the additional driving time to the different location if they wish. Say you have an employee traveling to a second office to work for the day. Whether they drive past their main office on the way to the second location, or even in the opposite direction, the travel time would be calculated from the time it takes to get from the main office to the second location. Not the employee’s home to the second location. This applies for both the going and return trip.
  1. Travel as Part of the Job Description – If any employees primary job consists of driving every day to various locations, job sites, client meetings or vendors then all travel time is considered time worked and must be compensated.
  1. Overnight Travel – Travel that keeps an employee away from home overnight is considered “travel away from home.”Travel away from home is clearly work time when it cuts across the employee’s workday. The time is not only hours worked on regular working days and during normal working hours but also during corresponding hours on nonworking days. As an enforcement policy the Division does not consider time spent in travel away from home outside of regular working hours as a passenger on an airplane, train, boat, bus, or automobile as worked time (dol.gov).
  1. Travel for Training – Travel time for training is also hours worked BUT only if the training meets the following criteria:
  • Training is during normal business hours
  • Training is work related
  • Training is NOT optional
  • Work is performed during the training

*Salaried employees are therefore not compensated for travel time in this case. In fact, these mostly apply only in the case of hourly employees.

And remember, since compensated travel hours are considered worked hours, they can be calculated into overtime!

  1. Travel for Errands During Normal Work Hours – All this covers is the actual travel to and from work, however. What about the in-between? Did you need someone to run to the bank, post office, or other work related errand? This would be considered time worked. As an hourly employee they would remain on the clock and be compensated for this time if during the normal business hours. Same with salaried employees.
  1. Travel Outside of Normal Work Hours – What if you ask an employee to stop on their way to work or home for a work related purpose? You ask your employee to stop and grab doughnuts for the whole office on their way in one morning. The employee is WORKING outside their normal business hours and should be compensated for their travel time from their home to the doughnut shop and to the office. Again, normal travel time from home to the office can be deducted from this time. Just remember it’s important to keep a work life balance [previous blog], and if an employee is willing to help out the company on their own time, it’s important to compensate them for their time. Again, normal travel time from home to the office can be deducted from this time.

Some states to be aware of having specific travel pay laws:

  • Colorado
  • Connecticut
  • DC
  • Illinois
  • Kansas
  • Massachusetts
  • New Jersey
  • North Dakota
  • Oregon
  • Wisconsin

With an ever growing company and multiple locations across multiple states, the miles rack up! Sometimes going the “extra mile” may cost you extra, but as they say, “You have to spend money to make money”, and sometimes going that extra mile can make all of the difference. If you have questions regarding payroll, staffing or how to stay in compliance, contact us as your partner employment agency.