Per diem is an allowance that is paid to workers by the day for the expenses that they incur while they are engaged in business-related travel. The expenses that might be covered by per diem pay include meals, tips, lodging, taxis, and others. Per diem pay might also be given to cover incidentals such as dry cleaning, WiFi, or laundry. The attorneys at Swartz Swidler can help you to understand per diem pay.
What is not covered by per diem rates?
You are not eligible for per diem pay for the costs of traveling to and from your regular place of employment. You are responsible for your own commuting costs.
When employers reimburse for travel
Employers might reimburse employees for their travel expenses when they work for the company at a location that is different than their normal work location. For example, if you normally work in New Jersey but have to travel to Chicago once each month, your employer might pay for your business travel expenses. Employers might either reimburse the expenses that are actually incurred or they might instead give a per diem to the employees who travel.
How are per diem rates set?
Employers base their per diem rates on several factors such as how long the employee will travel, the average expenses at different locations, and the federal per diem rate. The General Services Administration establishes per diem rates for federal workers who are on official travel away from their job locations. Most companies use the federal rate because per diem payments that exceed it are considered to be taxable income for the employees.
Per diem rates may vary depending on the location and by the types of travel expenses an employee might have. For example, if you travel to San Francisco, your per diem rate will likely be higher than if you travel to Las Vegas, Nevada because of differences in costs.
Why the per diem rate can be beneficial
If your employer uses a reimbursement system, you will have to keep track of your expenses and save your receipts. You will then have to fill out expense reports and wait to receive your reimbursement check. Employers also benefit in terms of time and cost savings. They will not have to incur labor costs involved with reviewing expense reports.
Per diem employment
In some industries, per diem is used as a term for temporary employment. This type of employment is very short-term and might last for a few days to cover for a worker who is on vacation or who is sick. An example of this type of employment is a substitute teacher.
Talk to the attorneys at Swartz Swidler
If you have questions about per diem rates, you might want to talk to the lawyers at Swartz Swidler. Schedule a free consultation by filling out our online contact form.