We’ve got issues regarding nonexempt travel pay. Many of our nonexempts travel, typically leaving their homes on Sunday afternoon for an all-day Monday meeting, and then returning home late Monday night. In addition to reimbursing their travel expenses, what pay do we owe them for the travel on Sunday afternoon and Monday night? Is it any different if they travel on a Monday afternoon and return home on a Tuesday night? — Joan F., Compensation Specialist in Ventura
Most travel time, with the exception of travel from home to work and back, is considered work time. However, because traveling does not require an employee to employ his/her skills, employees may be compensated at a rate that is less than their normal rate of pay, so long as all the employees are notified in advance of the travel rate, preferably as part of the company’s personnel policy. Travel pay rates may be as low as minimum wage, but may not be below minimum wage. Please note that since travel time is work time, hours worked/traveled in excess of eight per day are considered overtime.
According to California state law, with respect to this specific question, in addition to reimbursing all travel expenses, employers should compensate nonexempt employees at the designated travel rate for their hours traveled on Sunday and Monday. (Note that the federal Wage and Hour Division only requires employers to compensate employees for hours traveled that are within the employee’s normal working hours and not all the hours traveled, unless the employee performs work duties while traveling.
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For the hours spent in the all-day Monday meeting, the employees must be compensated at their normal rate. If their combined travel and work hours exceed eight hours in one day, then they must be compensated for their overtime hours according to the explanation on calculating overtime at the end of this response.
If Sunday is not a workday, then any hours traveled/worked on Sunday must be considered overtime.
If Sunday is an established workday for your organization, then the hours traveled on Sunday would be normal work hours and not overtime, provided they were eight hours or less according to California state law, and provided the employee had not already worked 40 hours that week, according to federal law.
For the second scenario, where the meeting is on Tuesday, if the time spent traveling on Monday afternoon is overtime, then the rate of pay would be the same as if they traveled on Sunday. However, if on Monday the employees work less than eight hours, then not all of the hours they travel will be overtime and, therefore, they should be compensated for those hours at their travel rate only. Any hours they travel in addition to working/traveling eight hours should be treated as overtime. In this case, the total pay would differ from the first scenario because the number of overtime hours worked would be fewer.
Calculating Overtime
In order to determine the overtime rate, a “regular rate of pay” must be calculated when an employee has more than one rate of pay. For example, let us say that an employee earns $10 per hour for normal work hours and $8.75 per hour for travel time. If this employee works 40 regular hours and travels 10 hours, their total weekly pay before overtime premiums are added in would be: ($10 x 40 hours = $400) + ($8.75 x 10 hours = $87.50) = $487.50. Their computed “regular rate of pay” would then be: $487.50 divided by 50 hours (legal maximum) = $9.75. Given that their “regular rate of pay” is $9.75, their overtime premium for time-and-one-half would be: $9.75 divided by 2 = $4.88. So, if an employee is traveling while time-and-one-half is due, he/she would receive pay at the rate of the travel rate ($8.75) plus the overtime premium ($4.88), which in this example would be $13.63 per hour.
Shari Dunn is managing principal of CompAnalysis, a compensation and performance management consulting firm in Oakland. Selvi Paulraj is a research associate at the same firm.