Handling Travel Pay: Payroll s Rules of the Road Presented on Wednesday, February 28, 2018

Transcription

1 Handling Travel Pay: Payroll s Rules of the Road Presented on Wednesday, February 28, The Payroll Advisor

2 2016 The Payroll Advisor 2

3 Housekeeping Credit Questions Today s topic Speaker 2016 The Payroll Advisor 3

4 To earn RCH credit you must Stay on the webinar, online for the full 60 minutes Be watching using your unique URL Certificates delivered by , to registered , by March 7 th 2016 The Payroll Advisor 4

5 v What is travel pay Our Focus For Today v Why a travel pay policy is imperative for payroll v What is required for travel pay under the Department of Labor both federal and state v What is taxable and what is nontaxable for travel reimbursements under IRS rules 2018 The Payroll Advisor 5

6 2018 The Payroll Advisor 6

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

8 Preliminaries v Can be a hidden problem from both payroll and human resources v Travel pay falls under both federal and state wage and hour laws v Must take the more strict regulation to follow--pays the employee more money 2018 The Payroll Advisor 8

9 Preliminaries--Continued v Since it is part of the FLSA hours worked it applies to nonexempt employees only v Nonexempt hourly or on salary v Employees who are exempt under the FLSA receive a salary therefore the type of time spent is irrelevant 2018 The Payroll Advisor 9

10 General Principles Involved 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 2018 The Payroll Advisor 10

11 And It Reads 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 The Payroll Advisor 11

12 Home to Work Ordinary Situation 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 The Payroll Advisor 12

13 Home to Work Emergency Situations 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 The Payroll Advisor 13

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

15 However 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 The Payroll Advisor 15

16 Opinion Letters Are Useful Here v 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 v Such rulings provide a potential good faith reliance defense for violations of the FLSA. v Are once again issuing! Administrator Wage and Hour Div The Payroll Advisor 16

17 Opinion Letters Are Useful Here 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 The Payroll Advisor 17

18 Home to Work on Special One-Day Assignments in Another City 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 2018 The Payroll Advisor 18

19 Special One Day Assignment Example 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 The Payroll Advisor 19

20 However v All the time involved need not be counted as hours worked v 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-to-work category v Meal period time would be deducted if taken 2018 The Payroll Advisor 20

21 Travel That s All in a Day s Work 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 The Payroll Advisor 21

22 But if 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 The Payroll Advisor 22

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

24 But What if Not Normal Working Hours? v The time is not only hours worked on regular working days during normal working hours but also during the corresponding hours on nonworking days. v 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 The Payroll Advisor 24

25 Enforcement Policy by DOL 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 The Payroll Advisor 25

26 Example 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 The Payroll Advisor 26

27 Traveling by Car 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 The Payroll Advisor 27

28 Example 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 The Payroll Advisor 28

29 Traveling and Working 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 The Payroll Advisor 29

30 Example Overnight Travel 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 The Payroll Advisor 30

31 Van Pool Drivers Drivers of vanpools need not be paid for time spent transporting other employees to and from work under the following conditions: 2018 The Payroll Advisor 31

32 Vanpools } 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 2018 The Payroll Advisor 32

33 Payroll Needs a Written Policy v Written policy is needed to prevent misunderstandings v Helps demonstrate intent if a lawsuit does occur v Helps payroll to apply the policy evenly and correctly v Employees entitled to overtime pay will be paid for hours worked during travel time according to this policy 2018 The Payroll Advisor 33

34 Yes, You Can Pay Differently 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 The Payroll Advisor 34

35 Travel Pay and Overtime v If hours worked goes into overtime calculation v If different rate can use weighted average v Any pay premiums are included in regular rate of pay calculations v Watch out for time differences and change of days v Watch out for daily on state level 2018 The Payroll Advisor 35

36 State Watch for Travel Pay 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 The Payroll Advisor 36

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

38 California v Does not distinguish between overnight out-of-town assignment or one day out-of-town assignment v Must pay for the time to get there, including checking luggage and purchasing tickets v Taking breaks from travel for meals or sleeping does not count 2018 The Payroll Advisor 38

39 California v Commuting in rideshare vehicles addressed in Labor Code Section 510(b) v 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 2018 The Payroll Advisor 39

40 California 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 The Payroll Advisor 40

41 Arkansas 2018 The Payroll Advisor 41

42 Iowa 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 The Payroll Advisor 42

43 Other States v Colorado: All travel time spent at the control and direction of the employer, excluding normal home to work travel, is compensable work time. v 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 2018 The Payroll Advisor 43

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

45 Travel Pay by State WA MT ND ME OR ID SD MN WI NY VT NH MA CA NV UT WY CO NE KS IA MO IL MI OH IN KY WV VA PA CT RI NJ DE MD AZ NM OK AR TN SC NC MS AL GA TX LA FL AK No provisions Yes if part of principle activity Specific provision for different types of travel Follows federal 2018 The Payroll Advisor 45 HI

46 The Federal Taxation of Travel Pay What are the IRS Requirements for Taxing and Reporting Travel Reimbursements The Payroll Advisor

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 2018 The Payroll Advisor 47

48 Per Diems v Per diem rates for meals and lodging are published on the General Services Administration website v v IRS no longer publishes Pub 1542 v Mileage is 54.5 cents per mile for The Payroll Advisor 48

49 GSA.gov v 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. v The CONUS per diem rate for an area is actually three allowances: the lodging allowance, the meals allowance and the incidental expense allowance The Payroll Advisor 49

50 GSA.gov v Most of the CONUS (approximately 2600 counties) are covered by the standard CONUS per diem rate of $144 ($93 lodging, $51 meals and incidental expenses). v In fiscal year (FY) 2018, there continue to be about 400 Non-Standard Areas (NSAs) that have per diem rates higher than the standard CONUS rate The Payroll Advisor 50

51 GSA.gov v Can search for rates by zip code or state v Or download all counties and cities in an Excel file 2018 The Payroll Advisor 51

52 GSA.gov v For example: Nevada 2018 The Payroll Advisor 52

53 Per Diem and Taxes Per diem payments are not part of an employee s wages if: v the payment is equal to or less than the federal per diem rate AND v the employer receives an expense report from the employee 2018 The Payroll Advisor 53

54 Per Diem and Taxes Expenses report must include: v Business purpose of the trip v Date and place of trip v Receipts for lodging if using meals-only per diem 2018 The Payroll Advisor 54

55 Mileage Per Diems v The trip must be substantiated for the business purpose and number of miles if reimbursing for mileage v If the per diem paid exceeds the limits the excess is reported as wages 2018 The Payroll Advisor 55

56 Per Diems v The excess subject to FIT, FICA and FUTA v Substantiated amounts goes in box 12 Form W-2 using code L 2018 The Payroll Advisor 56

57 2018 The Payroll Advisor 57

58 Accountable Plan Amounts paid under an accountable plan are not wages for: Ø Federal income tax Ø Social security tax Ø Medicare tax Ø Additional Medicare tax Ø Federal Unemployment Insurance 2018 The Payroll Advisor 58

59 Nonaccountable Plan v Payments made to employees for travel and other necessary expenses for the employer s business under a nonaccountable plan are wages v Subject to FIT, FICA and FUTA 2018 The Payroll Advisor 59

60 Payments are Under a Nonaccountable Plan if: v The employee is not required to or does not substantiate the expenses timely with receipts or other documentation v 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 v The employer pays an amount as a reimbursement that would have otherwise been wages 2018 The Payroll Advisor 60

61 When Does Payroll Become Involved? v Every time a payment under a nonaccountable plan is made through accounts payable to reimburse an employee for expenses payroll is involved v Every time a payment is made through AP and exceeds the per diem limits payroll is involved v If the payment is made through AP under an accountable plan and does not exceed the IRS limits payroll is not involved 2018 The Payroll Advisor 61

62 Questions 2018 The Payroll Advisor 62

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