Travel Pay: Lack of Information Can Create a "Hidden Problem, Crouching Lawsuit"
Paying travel pay correctly can be difficult for even the most compliant of payroll departments. And since travel pay falls under both the federal and state wage and hour laws, the potential for lawsuits can be enormous. The main stumbling block to paying travel time correctly is not in understanding the rules, although they are complex. No, the difficulty lies in knowing if and when the employee is traveling, where they are traveling to and the hours they are performing the travel. In other words, payroll just never seems to get all the facts concerning the travel time to determine the proper payments required.
For example: Ruth, a nonexempt employee, is flying from City A to City B to attend a training conference required by her employer. Under the Fair Labor Standards Act (FLSA) if the employee travels after her normal work hours the travel time is not considered hours worked in most cases. But that is not necessarily the same case in all states. So should the employee record the hours of the travel on her time card or not? That is why this is a hidden problem for payroll. Unless payroll knows the times of the flights it cannot determine the requirements on the federal or state level.
But it doesn’t have to be travel out of town to cause concern to payroll. When it come commuting the FLSA states that the first commute out of the morning and the last commute home of the day is not considered hours worked. But what if the employee is called out again after going home for the day? Is that simply another commute or travel time? Under Section 785.36 of the FLSA if an employee is called out at night to travel a substantial distance to perform an emergency job for the employer’s customer that time would be considered hours worked. And no, the FLSA does not give a definition of substantial distance, it depends on the circumstances. But how is payroll supposed to determine if the employee traveled a substantial distance if they don’t know how far the employee traveled? Again it is a lack of information that keeps the department from determining the correct pay.
So how does a payroll department solve this hidden problem and quiet that potential crouching lawsuit? One way is to establish a comprehensive, written travel pay policy and procedure. Anytime the nonexempt employee travels the procedure will instruct the employee how to record the travel time. So whether it is travel that occurs all in a normal workday, an out-of-town day trip, an overnight out of town trip, or an answer to an emergency call back all the information concerning the travel time will be recorded in writing and in the hands of payroll that can then make the proper determination on hours worked.
To watch my entire presentation on Travel Pay and all of my other payroll webinars from 2013, visit the Ascentis 2013 Webinar Directory.