Compensation for travel time for hourly employees [Guide 2023]

When it comes to travel time compensation for hourly paid employees, things can get confusing for both employers and employees. If you run a business where your employees are paid hourly but also have to travel for work, it's important to understand what your obligations are and what your employees are legally entitled to.

Exempt employees don't have to worry about this issue as much because they receive a flat amount on every paycheck, regardless of how long they commute. However, for non-exempt employees, there are rules set by the government that state that employers must compensate them for the time they spend traveling.

In this article, we'll go over everything you need to know about compensating your hourly employees for travel time so your business can stay compliant.

A free clock that frees up your time.

Follow the hours. Preparation for payroll. Control labor costs. All with our free time clock.

Try the Homebase time clock

What is travel time compensation?

Travel time compensation refers to the money that employers are required to pay their employees for the time they spend traveling to and from customer sites. It does not include regular trips from home to work.

In certain emergency situations or when the employer asks the employee to perform work-related tasks outside of their normal hours, the time spent traveling to their home may be considered paid time .

Remuneration for travel time vs remuneration for break or meal time

It is important to note that travel time is different from break or meal time. According to the US Department of Labor, any breaks of less than 20 minutes or more breaks where the employee still has work duties must be paid.

If an employee is asked by their employer to travel during a full break or lunch period, this travel time is considered work-related and must be paid for.

To avoid confusion, it's a good idea to have a separate policy in place that explains how lunch breaks and rest periods are handled in terms of compensation.

Who is entitled to a travel time allowance?

It is important to understand that only certain employees, called non-exempt employees, are entitled to be paid for the time they spend traveling for work. This includes hourly and salaried employees who fall into the non-exempt category.

On the other hand, there are employees called exempt employees who are not entitled to payment for work-related travel. In the United States, the Fair Labor Standards Act (FLSA) identifies different types of exempt employees, such as executives, administrative staff, professionals, IT personnel and outside salespeople.

These exempt employees are not paid specifically for their travel time since they receive a fixed salary regardless of their travel obligations.

When should you pay hourly employees for travel time?

Here are three common situations regarding compensated business travel, but please note that these examples may not cover all possible scenarios.

Local trips

If an employee's job requires them to travel during their normal working hours, they must be paid for that time. This includes situations where they are working or waiting during a trip, even if it is outside their normal working hours. However, employees who are on break or have enough time to do personal things are not eligible for payment during these times.

Example of local trip

Let's say Rebecca is a personal assistant who drives her client, Steve, to town to run errands. If this travel is part of her duties and occurs during her working hours, Sandra must be paid for this time.

One-day special assignment in another city

If employees need to take a day trip to another city for work-related activities such as conferences, classes, meetings, or similar events, you must pay them for the travel time to and from from this town. However, you can deduct the time they would normally spend on their daily commute.

Some companies choose to pay for the entire travel time, but it is not mandatory.

Example of a one-day special assignment in another city

Let's say Sheila works in your office and you send her to a conference. She travels from home to the conference venue and returns the same day. The round trip takes him two and a half hours, while his usual daily commute takes just 30 minutes.

In this case, you can deduct the 30 minutes of travel and pay him two hours of travel.

Night ride...