by Nancy Owen, PHR
and Laura Pokrzywa
The first consideration is the Fair Labor Standards Act (FLSA) which is the federal law that establishes minimum wage, overtime pay eligibility, recordkeeping, and child labor standards. The FLSA also gives the Department of Labor the authority to recover back wages and liquidated damages (owed to the employee), and to assess civil money penalties (owed to the government), in instances of minimum wage and overtime violations. So it is worth ensuring that you are paying your traveling employees correctly. The FLSA has a lot to say about travel time. One of the most basic provisions is this: time spent traveling during normal work hours is considered compensable work time.
In addition to federal law, employers must look at state laws. Many states have labor laws that give employees greater rights than federal labor laws – rights that go beyond just the time spent traveling. For example, although federal law does not require reimbursement for employee travel expenses, California law does have such a requirement. California mandates that employers indemnify employees for all necessary expenditures and losses that are work related. When it comes to travel pay, like all other employment issues, employers must know and follow the labor laws for each state in which they operate.
As we look into more details, remember that we are only considering travel pay for non-exempt employees. We are not referring to exempt employees because they are paid the same salary each week regardless of how many hours they work. When an exempt employee travels after hours or travels on days off, including weekends or holidays, their salary is unaffected. So, for the rest of this article, “employee” refers to non-exempt employees, including those that are paid by salary.
You’ll be glad to know that commute time is generally not considered compensable time. When your employee travels to work before their regular workday begins, and from work after the regular work day ends, that time is not considered work time and therefore it is not payable time.
Let’s look at when your employees should be paid:
- One exception to the general rule regarding to and from work is if an employee is called back to work for an emergency. In that case travel time from his home to the work site and back is compensable and he must be paid for that time.
- If an employee is asked to report to a location other than the normal work location, you would have to pay for any travel time that exceeds the employee’s usual travel to and from their normal reporting location.
- When your employee travels during the workday as part of their job, such as travel from one job site to another, or from one client location to another, that time is counted as hours worked and therefore must be paid.
- If your employee is traveling away from home for an overnight, he/she is paid for any travel time that occurs during the employee’s regularly scheduled work hours — even if the travel falls on a day they are not normally scheduled, such as a weekend or holiday. For example, let’s say Mary is regularly scheduled to work from 7:30 AM to 4:00 PM, Monday through Friday. She is given a special assignment that requires her to travel by train on Sunday, from 2:00 PM to 6:00 PM. Mary is owed travel pay for the time she spent traveling between 2:00 PM and 4:00 PM on Sunday, because that is the portion of her travel that cut across her regular work hours, even though it is not a regular work day.
- Time traveling away from home for an overnight assignment, travel outside of regular working hours as the driver of a vehicle must be paid. NOTE: As we saw in the example above, the time the employee spends traveling away from home outside of regular working hours as a passenger in a car, van, airplane, train or bus does not have to be paid. If Mary was driving a vehicle to get to her new assignment, she would be owed travel time pay for all four hours of her trip, not just the time that cut across her regular work hours.
- Time spent traveling to training must be paid if any one of the following circumstances apply: (1) the training is within the employee’s normal work hours; (2) the training is NOT voluntary, but is required; (3) the training is job-related; or (4) the employee is performing work during the training time.
Just a few more considerations as you decide who must be compensated for travel time:
- Is your employee engaged in work before they commute or during their commute (taking phone calls or running errands for work, for example)? If so, it’s compensable work time.
- Is your employee required to stop by the shop to pick up necessary tools, equipment or instructions before traveling to the worksite? If so, travel to the worksite is compensable work time.
- Is your employee traveling on a special assignment that does not require an overnight stay? If so, the time spent in traveling to and returning from the other city is work time, but you may deduct the time the employee would normally spend commuting to the regular worksite.
Now that you have determined what time is compensable, did you know that you can pay for travel time at a different rate?
Compensable travel time can be paid at a different rate of pay than the employee’s regular straight pay rate, as long as that travel pay rate is not lower than minimum wage. Please note such an arrangement should be clearly spelled out in a written wage agreement that the employee has signed. Care also should be taken to accurately record all compensable travel time as distinct from regular work time.
Of course, all compensable time must be included in overtime calculations, including compensable travel time. So how do you calculate overtime due when an employee is being paid two different rates of pay in one workweek?
According to the U.S. Department of Labor Wage and Hour Division’s publication, Regulations Part 778: Overtime Compensation, “Where an employee in a single workweek works at two or more different types of work for which different non-overtime rates of pay (of not less than the applicable minimum wage) have been established, his regular rate for that week is the weighted average of such rates. That is, his total earnings (except statutory exclusions) are computed to include his compensation during the workweek from all such rates, and are then divided by the total number of hours worked at all jobs.” Let’s consider an example to clarify.
EXAMPLE: Bob worked 50 hours in one week. He spent 40 hours at worksites @ $15/hr and 10 hours driving between worksites @ $8/hr.
Overtime is always one and one half the “regular rate.” The regular rate in this case is the “weighted” rate calculated by dividing the total money earned ($680) by the total hours worked (50).
Bob earned a total of $680 (40 hours at jobsites @ $15 PLUS 10 hours traveling @ $8 = $680), before overtime is added. Bob’s “weighted” rate for this workweek will be $680 divided by 50 hours total, for a rate of $13.60. This is the straight time for all 50 hours. Bob is now due the additional “one half” for the 10 hours of overtime he worked. So we need to multiply $13.60 by .05 to get the overtime rate of $6.80. That rate times the 10 hours of overtime means Bob is owed an additional $60.80 for overtime. Add that to his regular pay of $680 and we owe Bob a total of $740.80 for the workweek.
Don’t forget that all compensable travel time must be considered when calculating overtime for the workweek.
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