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Paying Employees for Both Travel Time and Mileage Reimbursements?

by Timesheets.com
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Although millions of people have recently joined the remote workforce, many employees still travel to work daily. Some workers travel more than others, though. Many employees, such as home care providers and construction workers, must travel for work. They often commute from work site to work site throughout their shifts. Employees who travel for work purposes may be eligible to earn travel time and mileage reimbursements.

Do you have to pay your employees both travel time and mileage reimbursements?

The Basics of Paying Employees Properly

As a business owner, you must know how much and when to pay your employees. If you don’t know the rules about employee compensation, you may end up violating Department of Labor (DOL) rules, which can cost you money and time later.

Generally, you must pay employees for all hours they work, including any overtime. You must pay employees minimum wage in your area, which varies by region. Some states use the federal minimum wage of $7.25/ hour, but approximately 29 states have established their own minimum wage requirements that exceed that. Also, when it comes to overtime, you must pay eligible employees 1.5x their normal rate of pay when they work over 40 hours in a workweek. This rule varies depending on the location of your company and your employees.

You aren’t obligated to give employees holiday pay or time off unless you live in a state that says otherwise. Some states, like New Jersey, for example, give employees one hour of sick time for every 30 hours they work. Also, those in federal government agencies or those in Rhode Island and Massachusetts pay employees extra for holidays. Besides these specific instances, you need to compensate employees properly for all time they spend completing work duties. 

Paying Travel Time

According to the DOL, “time spent traveling during normal work hours is considered compensable work time”. Overall, if an employee travels to multiple job sites during work hours, or completes work tasks while traveling, that employee must be compensated their hourly wage, as well as any overtime pay they earned. Travel time compensation only applies to non-exempt employees. Under current rules, employers do not have to compensate employees when they’re traveling from their residence to their official workstation and vice versa.

Here are some examples of paid travel time:

  • Traveling from one work site to another
  • Completing work errands (for example: going to the store to get more ink, going to the bank, etc.)
  • Work completed while on an airplane or in an airport
  • Work completed while on a bus or train
  • Moving equipment from the first job site and taking it to another job site
  • Travel for an overnight or 1-day assignment away from the primary worksite

California has further rules regarding travel time: If an employee’s temporary work location is longer than their usual commute time, travel time to the temporary site is compensable. In addition, an employee may earn compensation when they’re traveling to an out-of-town event. Time spent waiting to purchase a ticket, checking baggage, and getting on board, may be compensated. You can read more details here.

Employee Mileage Reimbursements

The Federal government does not require employers to pay employees for mileage reimbursements. However, certain states in the U.S. require employers to reimburse their employees when they commute for work purposes. California, for example, is a state that has pretty strict reimbursement rules. If you’re an employer in CA, you don’t necessarily have to pay employees with the IRS rate; however, you do have to pay employees for all the expenses they incur. Illinois is also another state where employers must reimburse employees for mileage and vehicle expenses related to work.

*Note: Employers do not have to reimburse employees the IRS rate, it’s only a suggestion. Reimbursement rates may differ depending on state law.

You Can’t Let Employees Earn Less than Minimum Wage

Employers have an obligation to make sure their employees earn at least minimum wage and salary base requirements. When an employee uses costs to operate a vehicle or travel on the road, you must be careful to ensure that they’re still getting minimum wage after subtracting their business-incurred expenses. This rule is called the “Kickback Rule”. If the employee “kicks” back enough of their wages (by paying for gas, tolls, tools, etc. out of their own pocket), and those costs bring the worker’s pay to something less than minimum wage, the employer must compensate the employee for the expenses.

For instance, if an employee in Kansas (minimum wage is $7.25/hour) makes $8.00/hour but spends $50 per week on gas for the company’s car, the employee’s wages would actually be $6.75. That amount is below minimum wage, which is unlawful under the DOL. To get this number, simply multiply the employee’s wages by the number of hours they work in a week. Divide the total by the number of hours they worked, and you’ll get the result.

In the scenario above, the employee is using their own funds to pay for gas, resulting in a wage lower than minimum wage. When an employee’s wages are below minimum wage after subtracting business-incurred expenses, employers must pay them reimbursements. They must do this even if their state doesn’t require mileage reimbursements.

Paying for Both Travel Time and Mileage Reimbursements

Whether you must pay for both travel time and mileage reimbursements depends on which state your employees reside and work, and it also depends on the specific circumstances. If employees are traveling from job site to job site you must pay them travel time, as long as travel isn’t from their residence to their official workstation and vice versa. However, if that employee is in New York and is traveling for work purposes, they are also subject to mileage reimbursement.

Overall, it’s best that you check with your local labor board and familiarize yourself with travel time and reimbursement rules in your area. Depending on what city or state you’re in, you may have to pay both.

Do you need to track employee time, mileage, and expenses for reimbursement? Try Timesheets.com today! You can start a 15-day free trial to see if it works for your business.

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Beverly Brudevold May 14, 2023 - 8:38 am

I work for a home health company, I take my client to the doctors, and I use my car my gas and they only pay me 20.00 round trip of 140 miles. Is this legal?

Beverly Brudevold May 14, 2023 - 8:52 am

What is the Minnesota law for reimbursement for travel expenses home health.


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