Travel Pay 2017 Presented on Wednesday, March 1, 2017

Transcription

1 Travel Pay 2017 Presented on Wednesday, March 1, 2017

2

3 HOUSEKEEPING Credit Questions Topic Speaker

4 HOUSEKEEPING Certificates delivered by no later than 3/30/2017 Be watching using YOUR unique URL for login Stay on the webinar, online for the full 60 minutes.

5 What Is Our Focus For Today? 5 What is travel pay Why a travel pay policy is imperative for payroll What is required for travel pay under the Department of Labor both federal and state What is taxable and what is nontaxable for travel reimbursements under IRS rules

6 Today s Presenter Vicki M. Lambert CPP Vicki M. Lambert, CPP, is President and Academic Director of The Payroll Advisor, a firm specializing in payroll education and training. The company s website offers a subscription payroll news service which keeps payroll professionals up-to-date on the latest rules and regulations.

7 7 Travel Pay Under Wage Hour Laws What does the Federal Department of Labor and the States Requirements for Employees Who Travel

8 Preliminaries 8 Can be a hidden problem from both payroll and human resources Travel pay falls under both federal and state wage and hour laws Must take the more strict regulation to follow--pays the employee more money

9 Preliminaries--Continued 9 Since it is part of the FLSA hours worked it applies to nonexempt employees only Nonexempt hourly or on salary Employees who are exempt under the FLSA receive a salary therefore the type of time spent is irrelevant

10 General Principles Involved 10 The principles which apply in determining whether or not time spent traveling is working time depend upon the kind of travel involved. These are contained in to of the FLSA/ Portal-to-Portal Act

11 And It Reads 11 No employer shall be liable for the failure to pay the minimum wage or overtime compensation for time spent walking, riding, or traveling to and from the actual place of performance of the principal activity or activities which such employee is employed to perform either prior to the time on any particular workday at which such employee commences, or subsequent to the time on any particular workday at which he ceases, such principal activity or activities Section

12 Home to Work Ordinary Situation 12 An employee who travels from home before his regular workday and returns to his home at the end of the workday is engaged in ordinary work travel which is a normal incident of employment. This is true whether he works at a fixed location or at different job sites. Normal travel from home to work is not work time.

13 Home to Work Emergency Situations 13 There may be instances when travel from home to work is work time. For example, if an employee who has gone home after completing his day s work is called out at night to travel a substantial distance to perform an emergency job for one of his employer s customers, all time spent on such travel is working time. Section

14 No We Don t 14 And no before you ask we don t have an definition of substantial distance to give. The DOL does not provide one.

15 However 15 Where an employee is given prior notice (for example Friday night) that he will be required to work at a customer s place of business on Saturday it will not be considered as an emergency call outside of his regular working hours.

16 Opinion Letters Are Useful Here 16 An opinion letter signed by the Administrator of the Wage and Hour Division is an official ruling or interpretation of the Wage and Hour Division for purposes of the Portal-to- Portal Act, 29 U.S.C Such rulings provide a potential good faith reliance defense for violations of the FLSA. Administrator Wage and Hour Div.

17 Opinion Letters Are Useful Here 17 Opinions signed by other Wage and Hour officials (i.e. Non-Administrator letters), denoted by an NA following the opinion number; do not constitute rulings or interpretations under the Portal-to-Portal Act.

18 Home to Work on Special One-Day Assignments in Another City 18 Problem arises when an employee who regularly works at a fixed location in one city is given a special 1- day work assignment in another city. Let s look at an example

19 Special One Day Assignment Example 19 An employee who works in Washington, D.C., with regular working hours from 9 a.m. to 5 p.m. is given a special assignment in New York City. Employee is instructed to leave Washington at 8 a.m. The employee arrives in New York at 12 noon, ready for work. The special assignment is completed at 3 p.m. The employee arrives back in Washington at 7 p.m.

20 However 20 All the time involved need not be counted as hours worked Since except for the special assignment the employee would have to report to his regular work site, the travel between home and the railroad depot may be deducted as home-towork category Meal period time would be deducted if taken

21 Travel That s All in a Day s Work 21 Travel spent by an employee in travel as part of his principle activity, such as travel from job site during the workday, must be counted as hours worked. Where an employee is required to report at a meeting place to receive instructions or to perform other work there, or to pick up and to carry tools, the travel from the designated place to the work place is part of the day s work and must be counted as hour worked regardless of contract, custom, or practice.

22 But if 22 The employee normally finishes his work on the premises at 5p.m. and is sent to another job at 8 p.m. and is required to return to his employer s premises arriving at 9 p.m. all the time is working time. However, if the employee goes home instead of returning to his employer s premises the travel at 8 p.m. is not hours worked.

23 Travel Away From Home Community 23 Travel that keeps an employee away from home overnight is travel away from home. Travel away from home is clearly work time when it cuts across the employee s workday The employee is simply substituting travel for other duties.

24 But What if Not Normal Working Hours? 24 The time is not only hours worked on regular working days during normal working hours but also during the corresponding hours on nonworking days. Example: If an employee regularly works from 9 a.m. to 5 p.m. Mon-Fri the travel time during these hours is work time on Saturday and Sunday as well regular meals period not counted.

25 Enforcement Policy by DOL 25 The DOL will not considered as work time that time spent in travel away from home outside of regular working hours as a passenger on an airplane, train, boat, bus, or automobile.

26 Example 26 An employee works from 8 a.m. to 5 p.m. Monday through Friday. She is to leave to fly to New York from her office in Los Angeles at 8 p.m. on Tuesday. This is outside her normal work hours so it is not work time.

27 Traveling by Car 27 If an employee is offered public transportation but requests permission to drive his car instead the employer may count as hours worked either the time spent driving the car or the time he would have had to count as hours worked during work hours if the employee has used public conveyance.

28 Example 28 An employee is to fly from Washington D.C. to New York City on a scheduled flight that takes one hour. It leaves on Monday at 9 a.m. and arrives at 10 a.m.. But rather than fly the employee wishes to drive her own car and leaves Washington D.C. at 9 a.m. on Monday and arrives in New York at 2 p.m. on Monday. Only the one hour flight time is counted as hours worked.

29 Traveling and Working 29 Any work which an employee is required to perform while traveling must of course be counted as hours worked. But non working hours are just that. So sleeping, eating, resting, entertainment or the like are non working hours.

30 Example Overnight Travel 30 An employee travels overnight to a distant city. He leaves on Wednesday morning, travels half the day. Arrives at the location and begins working at 1p.m.. He works until 5 p.m.. On Thursday he works from 8 a.m. to 5 p.m. and then boards the plane for home. That employee is entitled to pay for all working hours and all travel time during those working hours. The travel time after 5 p.m. on Thursday would not be work hours.

31 Van Pool Drivers 31 Drivers of vanpools need not be paid for time spent transporting other employees to and from work under the following conditions:

32 Vanpools 32 The transportation provided must be primarily for the benefit of the participating employees Participation is in the program is entirely voluntary and employees are free to accept or reject the arrangement at any time The employee-driver is chose by the participating employees The pickup times and route are established by the participating employees The employer has virtually no control over the arrangement

33 Payroll Needs a Written Policy 33 Written policy is needed to prevent misunderstandings Helps demonstrate intent if a lawsuit does occur Helps payroll to apply the policy evenly and correctly Employees entitled to overtime pay will be paid for hours worked during travel time according to this policy

34 Yes, You Can Pay Differently 34 Travel pay can be paid at a different rate if that rate is equal to the applicable minimum wage and the employee is clearly informed of the different rate before the travel occurs. That is why the written policy is needed.

35 Travel Pay and Overtime 35 If hours worked goes into overtime calculation If different rate can use weighted average Any pay premiums are included in regular rate of pay calculations Watch out for time differences and change of days Watch out for daily on state level

36 State Watch for Travel Pay 36 The states can vary widely on travel pay requirements. Some may match federal others will be stricter or the state may not even address the issue.

37 California But of Course 37 California law provides greater protection for the employee Compulsory travel time constitutes time during which the employee is subject to the control of the employer hours worked Doesn t matter if free to read or engage in other pursuits while riding State does not distinguish between hours worked during normal working hours or outside normal working hours.

38 California 38 Does not distinguish between overnight out-of-town assignment or one day out-of-town assignment Must pay for the time to get there, including checking luggage and purchasing tickets Taking breaks from travel for meals or sleeping does not count

39 California 39 Commuting in rideshare vehicles addressed in Labor Code Section 510(b) Time spent commuting to and from the first place at which the employee s presence is required is not part of the day s work if the employee commutes in a ridesharing vehicle that is owned, leased or subsidized by the employer

40 California 40 Compulsory travel time longer than the employee s normal commute is considered compensable time. Travel time to a job site within reasonable proximity of the employee s regular work site is not compensable.

41 Arkansas 41

42 Iowa 42 Unless a collective bargaining agreement provides otherwise, an employee is not entitled to compensation for the time that an employee spends traveling to and from the worksite on transportation provided by the employer, when during that time, the employee performs no work, the transportation is provided by the employer as a convenience for the employee, and the employee is not required by the employer to use that means of transportation to the worksite. An employee is entitled to compensation for the time that an employee spends traveling between worksites if the travel is done during working hours.

43 Other States 43 Colorado: All travel time spent at the control and direction of the employer, excluding normal home to work travel, is compensable work time. New Jersey: An employee who is required or authorized to travel from one establishment to another after the beginning or before the ending of his or her workday shall be compensated for travel time at not less than the employee s regular hourly wage

44 Other States 44 New York: shall include time spent in traveling to the extent that such traveling is part of the duties of the employee Vermont: As the Vermont statutes do not address compensation for travel time of employees, we defer to the federal regulations in this area.

45 Other States 45 Massachusetts: 455 CMR 2.03(4): Ordinary travel between home and work is not compensable working time. However, if an employee who regularly works at a fixed location is required, for the convenience of the employer, to report to a location other than his or her regular work site, the employee shall be compensated for all travel time in excess of his or her ordinary travel time between home and work. An employee required or directed to travel from one place to another after the beginning of or before the close of the work day shall be compensated for all travel time.

46 46 The Taxation of Travel What are the IRS Requirements for Taxing and Reporting Travel Reimbursements

47 47 Per Diems Employer may reimburse employee for travel days, miles or some other fixed allowance if it does not exceed the rates established by the Federal Government

48 Per Diems 48 Per diem rates for meals and lodging are published on the General Services Administration website IRS no longer publishes Pub 1542 Mileage is 53.5 cents per mile for 2017

49 GSA.gov 49 GSA establishes the per diem rates for the lower 48 Continental United States (CONUS), which are the maximum allowances that federal employees are reimbursed for expenses incurred while on official travel. The CONUS per diem rate for an area is actually three allowances: the lodging allowance, the meals allowance and the incidental expense allowance.

50 GSA.gov 50 Most of the CONUS (approximately 2600 counties) are covered by the standard CONUS per diem rate of $140 ($89 lodging, $51 meals and incidental expenses). In fiscal year (FY) 2016, there continue to be about 400 Non-Standard Areas (NSAs) that have per diem rates higher than the standard CONUS rate.

51 GSA.gov 51 Can search for rates by zip code or state Or download all counties and cities in an Excel file

52 GSA.gov 52 For example: Nevada

53 Per Diem and Taxes 53 Per diem payments are not part of an employee s wages if: the payment is equal to or less than the federal per diem rate AND the employer receives an expense report from the employee

54 Per Diem and Taxes 54 Expenses report must include: Business purpose of the trip Date and place of trip Receipts for lodging if using meals-only per diem

55 Mileage Per Diems 55 The trip must be substantiated for the business purpose and number of miles if reimbursing for mileage If the per diem paid exceeds the limits the excess is reported as wages

56 Per Diems 56 The excess subject to FIT, FICA and FUTA Substantiated amounts goes in box 12 Form W-2 using code L

57 Accountable Plan 57 The following three rules must be met: 1. The employee must incur or be paid for deductible expenses while performing services as an employee 2. The expenses must be substantiated within a reasonable amount of time 3. The employee must return any amounts in excess of the substantiation within a reasonable amount of time

58 Accountable Plan 58 Amounts paid under an accountable plan are not wages for: Federal income tax Social security tax Medicare tax Additional Medicare tax Federal Unemployment Insurance

59 Reasonable Amount of Time 59 Depends on the facts and circumstances for each payment but generally the time frame is reasonable if: 1. The employee receives the advance within 30 days of the time they incur the expenses 2. Adequately account for the expenses within 60 days after the expenses are paid or incurred 3. Return any excess of expenses within 120 days after the expenses are paid or incurred

60 Nonaccountable Plan 60 Payments made to employees for travel and other necessary expenses for the employer s business under a nonaccountable plan are wages Subject to FIT, FICA and FUTA

61 Payments are Under a Nonaccountable Plan if: 61 The employee is not required to or does not substantiate the expenses timely with receipts or other documentation The employer advances or pays an amount to an employee regardless of whether the employer reasonably expected the employee to have business expenses related to the business The employer pays an amount as a reimbursement that would have otherwise been wages

62 When Does Payroll Become Involved? 62 Every time a payment under a nonaccountable plan is made through accounts payable to reimburse an employee for expenses payroll is involved Every time a payment is made through AP and exceeds the per diem limits payroll is involved If the payment is made through AP under an accountable plan and does not exceed the IRS limits payroll is not involved

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