When Do You Compensate Employees For Travel And Commute Time?
This article is a reprint of Wise Bread's contribution to OPEN Forum from American Express -- where small business owners can get advice from experts and share tips with each other.
The question of whether you owe an employee wages or even overtime for travel and commuting time are widely misunderstood. Given the stakes—two to three years back pay and in some circumstances double damages on top of legal and court costs—this is something you really need to get right.
To pay or not to pay, that is the question. The safest answer, when it comes to paying your non-exempt employees, is if they work, pay them. But what constitutes work? When someone is traveling on business, for example, is that work? It depends on when they do it, and what they do while they’re doing it.
How about their commute? Is that work? Well, in some cases, yes.
Let’s be clear, exempt employees are a different story. What we’re talking about here are salaried or hourly non-exempt workers. We’re also talking specifically about federal Fair Labor Standards Act. State laws may impose even tighter standards.
"Many employers are unfamiliar with travel time compensability issues because it is usually exempt employees who are doing the traveling,” says Robin Shea, a Winston-Salem-based partner with Constangy Brooks & Smith LLP, nationwide employment law specialists.
“Exempt employees are not entitled to any extra compensation for travel time, even if they travel or work outside of their normal hours of work. However, if the employees on the road are non-exempt, they must be compensated for any time in which work is actually performed (no matter when it occurs). In addition, non-exempt employees must be compensated for travel time (even if they choose to spend the time reading a novel or watching a movie) that occurs during their regular hours of work.”
That sounds fairly straightforward, but I for one got it all wrong when I tried to parrot it back to Robin.
When are you on the hook for travel time?
Let’s say you send Jane to a phone etiquette training session across the country. She normally works Monday to Friday from 9am to 5pm. Her flight departs at 6pm on Sunday. Do you owe her? The answer is, only if she actually works during the travel time.
How about if her flight leaves at 10am? Then you owe her regardless of whether she watches reruns of” The Office” or she works. Why? Because she’s traveling during her regular hours of work, even if she’s traveling outside her regular work days. Bizarre, but true.
The point is, like I said earlier, if she’s working, she should be paid.
Her travel itself does not constitute work unless:
- it takes place between 9 a.m. and 5 p.m. any day of the week; or
- it takes place outside those hours and she works while she’s traveling.
In either case, she may also be entitled to overtime if she exceeds 40 hours a week.
What if Jane texts a couple of co-workers while she’s traveling on Sunday night? Does that mean you have to pay her travel time? Not necessarily.
“There is an exception for time that is so trivial that it would be more trouble than it's worth to keep up with it,” says Shea. Though she adds that the determination of what is trivial varies from one jurisdiction to another.
When are you on the hook for commuting time?
Then there’s the question of whether or not commute time constitutes work. Here again, it’s a rat’s nest. Consider the following scenarios:
1. Joe has to go directly to a client’s office from home, rather than coming to the office first.
If he travels longer than an hour, he’s entitled to pay.
2. Jane has to travel between offices during the day.
Yup, she has to be paid.
3. Joe gets up in the morning, texts Jane, bangs out some urgent emails, and answers a phone call from someone who can’t get logged into his computer.
While commuter travel of less than an hour is not typically considered part of the workday, because Joe started working before he left for work, he may be entitled to compensation for his commute time (as well as the time he worked at home). According to Shea, the employer doesn’t have to start paying until the employee performs his or her first “principal activity of the workday,” or their “first task that is integral and indispensable” to the first “principal activity.”
What to Do?
Robin finds that employers make mistakes with this at two extremes. Either they mistakenly compensate non-exempt employees for all non-working travel time, or they fail to compensate them for any of the time. Either way, they lose. The only safe bet is to check with an attorney who’s very familiar with the Fair Labor Standards Act (FLSA) and employment rules in your state. This is not the place for mere mortals.
For more details, check out Constangy’s Employment and Labor Insider blog.
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Tagged: Entrepreneurship, Small Business Resource Center, Taxes, commute expenses, employee commute, employee travel, expense reimbursement, small business, travel expenses
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