After restricting work travel due to the pandemic, many employers are sending their employees to off-site sales meetings, conferences and trainings. Here are the rules of the road for California workers’ compensation work-related travel.
Non-exempt employees must be compensated for travel time set by the employer
Overtime-exempt employees, such as managers, professionals and high-level administrators, are paid a set wage of at least twice the hourly state minimum wage for performing their duties, however long it takes. They are not entitled to additional travel compensation.
Under current state wage ordinances, non-exempt employees, whether hourly or salaried, are entitled to pay for all “hours worked,” including “time during which the employee is subject to the supervision of the side of the employer. …” This includes time spent on travel at the employer’s appointment.
DLSE Guidelines for Business Travel Reimbursement
In 2002, the California Division of Labor Standards Enforcement (DLSE) issued Opinion 2/21/2002, whose guidance was later incorporated into the agency’s enforcement guidance, reviewing the legality of an employer’s policy that provided that “Time spent traveling as a passenger on by plane, train, bus, car or taxi to a destination outside the company [an employee’s] normal working hours are not considered paid time.” The DLSE concluded that the policy violated California law, even though it could pass partial review under less demanding federal pay regulations.
“Under state law, if an employer requires an employee to attend an out-of-town business meeting, training, or any other event, the employer cannot waive the obligation to pay for the employee’s time to travel to and from the location. this event Time spent driving or as a passenger in an airplane, train, bus, taxi, car, or other form of transportation while traveling to and from this out-of-town event, and time spent waiting to purchase a ticket, check baggage, or board , in such circumstances is time spent carrying out the employer’s instructions, and thus can only be characterized as the time during which the employee is subject to the employer’s control. Such forced travel time therefore constitutes compensable ‘hours worked’.
According to the DLSE, this does not mean that every hour an employee spends traveling at the employer’s request is compensable. “[T]time spent on a break in travel to eat, sleep, or engage in purely personal matters not related to travel or making necessary transportation connections (for example, spending an extra day in the city before the start or after the end of the conference for the purpose of sightseeing “Yatok”) is not subject to compensation”.
The employer can set a lower rate of travel compensation before it occurs
The DLSE permits an employer by policy or contract to “set a separate rate for commuting, provided that no rate of pay may be less than the state minimum wage. Under state law, the obligation to pay at least the minimum wage applies to each individual hour or part of each hour worked.”
All employees must be reimbursed for work-related travel expenses
California Labor Code Section 2802 requires an employer to reimburse exempt and non-exempt employees equally for all necessary expenses incurred in connection with employer-required travel.
Employers often reimburse employees who travel out of town on business based on a mileage rate set by the IRS, rather than all expenses actually incurred by the employee while driving. In June, the IRS announced an unusual mid-year hike in the business mileage reimbursement rate from 58.5 cents to 62.5 cents from July 1 until the end of the year to reflect recent increases in fuel prices.
Limitation of the employer’s obligation to pay work-related expenses
Non-exempt employees must pay the employer’s travel expenses requires, not business trips that an employee decides to take, such as an enrichment seminar that an employee decides to take to make themselves a better employee. In addition, the employer must compensate for “necessary” travel expenses, not discretionary extras such as seat or room upgrades. Along with the ability to pre-set a lower rate of compensation for hours spent on a business trip, these limits give employers some control over their business travel budget.
Dan Eaton is a partner at the law firm Seltzer Caplan McMahon Vitek in San Diego, where his practice focuses on employer defense and counsel. He is also a faculty member at San Diego State University’s Fowler College of Business, where he teaches classes in business ethics and employment law. He can be reached at [email protected] His Twitter handle @DanEatonlaw