How to Pay Hourly Employees for Business Travel in California: A Detailed Guide

California employers must compensate their hourly employees for time spent traveling on business. This obligation stems from the state’s robust labor laws, ensuring employees are paid for all hours worked. Understanding the nuances of this requirement is crucial for compliance and avoiding costly legal entanglements.

Understanding Compensable Time in California: The Cornerstone

At the heart of California’s labor laws lies the concept of “hours worked.” This isn’t limited to tasks directly producing revenue. It encompasses any time the employer controls the employee and requires their presence. Travel time, under many circumstances, falls squarely into this category. The key is distinguishing between ordinary commute time, which is generally non-compensable, and business travel, which often is.

The Golden Rule: Employer Control and Benefit

California’s Industrial Welfare Commission (IWC) Orders, which govern wages, hours, and working conditions for various industries, define “hours worked” broadly. Essentially, if an employer requires an employee to travel for the benefit of the business, that travel time is generally compensable. This includes travel to meetings, training sessions, job sites, or any other location outside the employee’s regular workplace as directed by the employer.

Practical Scenarios and Compensation Methods

The following outlines several common business travel scenarios and the corresponding compensation requirements in California:

1. Traveling During Regular Work Hours

If an employee travels during what would normally be their regular work hours, they must be paid their regular hourly rate for that time. For example, if an employee typically works from 9 am to 5 pm and is required to travel to a client meeting from 10 am to 12 pm, they must be paid for those two hours at their usual rate.

2. Traveling Outside Regular Work Hours

This is where things get a bit more complex. If the travel occurs outside the employee’s normal working hours but is still required by the employer, the employee is generally entitled to compensation. For example, if an employee has a normal workday of 9 am to 5 pm and is required to take a 6 am flight for a conference, the time spent traveling on that flight is generally compensable.

3. Overnight Travel

Overnight travel presents further considerations. If an employee travels overnight, all time spent working, such as attending meetings or completing work-related tasks in the hotel, is compensable. The rules become less clear regarding sleeping hours and free time. Generally, if the employee is free to engage in personal activities during these hours, that time is not compensable. However, if the employee is restricted in their activities or required to be “on-call,” that time may be considered compensable.

4. Driving Time

If an employee is required to drive for business purposes, all driving time is typically compensable, regardless of whether it falls during their regular work hours. This is because the employee is actively performing a task for the employer’s benefit.

5. Travel to Temporary Work Sites

If an employee is required to report to a temporary work site that is significantly farther than their usual commute, the additional travel time may be compensable. The determination of whether the travel is compensable depends on the specific facts and circumstances, including the distance traveled, the frequency of the travel, and whether the employee is subject to the employer’s control during the commute.

Common Mistakes to Avoid

• Misclassifying Commute Time: Confusing regular commute time with business travel is a common error. Remember, travel that is part of the job and directed by the employer is typically compensable.
• Failing to Track Travel Time: Accurate tracking of all travel time is crucial for compliance. Employers should implement a system for employees to record their travel time accurately.
• Assuming Salaried Employees are Exempt: While certain salaried employees are exempt from overtime requirements, many are not. If a salaried employee is classified as non-exempt, they are still entitled to compensation for travel time.
• Ignoring Local Ordinances: Some California cities and counties have their own minimum wage and labor laws that may affect travel time compensation. Employers should be aware of and comply with all applicable local ordinances.

Clear Policies are Essential

Employers should develop clear and comprehensive travel policies that outline how travel time will be compensated. These policies should be in writing and communicated to all employees. The policy should clearly define what constitutes compensable travel time, how travel time should be tracked, and how reimbursement for travel expenses will be handled.

Maintaining Accurate Records

Accurate record-keeping is essential for demonstrating compliance with California’s labor laws. Employers should keep detailed records of all hours worked, including travel time, for at least three years. These records should include the dates and times of travel, the purpose of the travel, and the amount of compensation paid for the travel time.

Seek Legal Counsel

Navigating California’s complex labor laws can be challenging. Employers should consult with experienced employment law counsel to ensure that their travel time compensation policies comply with all applicable laws and regulations. This proactive approach can help employers avoid costly lawsuits and maintain a positive relationship with their employees.

Frequently Asked Questions (FAQs)

1. What if an employee chooses to take a longer route for personal reasons during business travel?

Generally, only the time reasonably required for the business travel is compensable. Any additional time spent due to personal detours is not required to be paid.

2. Are employees entitled to reimbursement for travel expenses in addition to compensation for travel time?

Yes. California law requires employers to reimburse employees for all necessary business expenses, including transportation, lodging, and meals.

3. Does the method of transportation affect whether travel time is compensable?

No. Whether the employee travels by car, plane, train, or other means, the principle remains the same: if the travel is required by the employer and benefits the business, it is typically compensable.

4. Can an employer require an employee to sign a waiver agreeing not to be paid for travel time?

No. Such waivers are generally unenforceable in California. Employees cannot waive their right to be paid for hours worked under California law.

5. How does this apply to remote employees who occasionally travel to the office?

If a remote employee is required to travel to the office or another location for a meeting or training, that travel time is generally compensable, just like for any other employee.

6. Are there any exceptions to the rule that travel time is compensable?

Very few. The primary exception is ordinary commute time from home to a fixed place of work. The exceptions are extremely limited and should be discussed with legal counsel.

7. What are the penalties for failing to pay employees for travel time?

Employers who fail to pay employees for travel time may be subject to significant penalties, including back wages, interest, penalties, and attorney’s fees. They may also face lawsuits from employees or the Labor Commissioner.

8. Can an employer pay a flat rate for travel time instead of an hourly rate?

Yes, but the flat rate must be at least equivalent to the minimum wage for all hours worked, including travel time. Additionally, the flat rate agreement must be clear and in writing.

9. How do California travel time rules compare to federal law?

California law is generally more employee-friendly than federal law regarding travel time compensation. Federal law has a more limited definition of “hours worked” and may not require compensation for certain types of travel time that are compensable under California law. Therefore, employers in California must comply with the stricter state law.

10. What if an employee is using their personal vehicle for business travel?

In addition to compensating the employee for travel time, the employer must also reimburse the employee for mileage incurred while using their personal vehicle for business purposes. The IRS sets a standard mileage rate each year, which employers can use to calculate mileage reimbursement.

11. What are “split shifts” and how do they relate to travel time?

A “split shift” occurs when an employee’s work schedule is interrupted by non-working hours. In California, if an employee works a split shift, the employer must pay them one hour of pay at the minimum wage rate, in addition to the wages earned for the hours worked. If the travel itself creates the “split shift”, that needs to be factored into the compensation.

12. Where can employers find official guidance on California travel time laws?

Employers can find official guidance on California travel time laws from the California Department of Industrial Relations (DIR), the Division of Labor Standards Enforcement (DLSE), and the Industrial Welfare Commission (IWC) Orders. Consulting with an experienced employment law attorney is also highly recommended.