We’re having a devil of a time figuring out precisely how to pay our nonexempt employees when they travel. If they travel by air and stay overnight, do we start paying as soon as they leave their house for the airport? Then let’s say the plane lands at 7 p.m., they go to the hotel, settle in, and go out for dinner. When do we stop paying—when they arrive at the hotel? Also, I gather that we can pay a lower rate for travel time—do most companies do that? If we end up paying overtime for travel periods, does that get paid at the lower travel rate? Sorry for the picky questions.
— Ralph D., HR Specialist in Ventura
Much confusion surrounds the issue of paying employees for travel time in California because the federal and state standards differ. California has a stricter definition of the term “hours worked,” which is the relevant factor to determine whether travel time is compensable. California defines “hours worked” as all time “subject to the control of the employer,” a definition not contained in federal law.
Under federal law, travel time spent on a train, bus, or plane that occurs outside the employee’s normal business hours is not considered hours worked and is therefore not compensable. Under California law, because of the stricter definition of hours worked, all business-related travel time, regardless of when it is worked, is considered compensable hours worked because it is time spent under the employer’s control.
Out-of-Town Travel
Ralph asks when compensable time begins for an employee who drives to the airport to fly out of town on an overnight trip. Generally, California’s labor standards enforcement policy provides that if the employee leaves his or her house to go to the airport before the start of work, the employer may deduct from “hours worked” the employee’s normal commute time to the office from the time it takes the employee to drive to the airport. If the employee travels to the airport during the middle of the workday or after beginning work for the day, no such deduction would be permitted. On the return leg of the trip, if an employee drives home from the airport after work hours, you could deduct his or her normal commute time.
After the employee arrives at the destination and makes his or her way to the hotel, when does the time stop being compensable? The labor commissioner has suggested that as soon as the employee is able to “engage in purely personal pursuits not connected with traveling or making necessary travel connections…the time is no longer compensable.” Accordingly, in the scenario Ralph describes, once the employee gets to his or her hotel room, the time would no longer be compensable—as long as the employee does no work there.
Lower Pay Rates for Travel; Calculating Overtime
Ralph also asks about the concept of paying a lower rate for travel time. In 1984, the labor commissioner issued an interpretive bulletin allowing employers to pay a lower rate—even minimum wage— for travel time. Although this concept has been around a long time, I am not aware of many companies that take advantage of the ability to pay for travel time at a lower pay rate.
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Ralph then asks about paying overtime at the lower travel time pay rate. Both federal and state wage and hour laws don’t permit the overtime rate for travel to be calculated based on the lower travel time rate. Rather, if two pay rates have been paid to an employee, a blended rate, calculated based on a weighted average formula, must be used to pay overtime.
Travel Pay Litigation on the Uprise
The questions Ralph poses are timely in the era of wage-hour class action lawsuits. At a recent labor and employment law conference, an attorney who usually represents employees contended that cases involving travel time are “the next big area of litigation” in wage and hour cases. Accordingly, make sure your company’s travel time policies pay employees for all compensable time.
Lloyd W. Aubry, Jr., Esq., former California labor commissioner, is of counsel at the San Francisco office of the law firm Morrison & Foerster LLP.