Per diem is Latin for “per day” or “for each day” but many employees understand its use as how it affects their pay while traveling. Some employers give an employee certain “per diem” benefits to compensate them for certain benefits while they are traveling for work purposes. Per diem payments are for ordinary and necessary work-related travel and often include reimbursement or compensation for lodging, meals and incidental expenses. They are paid in an established amount per each day. They are often an alternative to workers running expense reports and being reimbursed for these expenses. These payments are not taxed as long as they do not exceed certain limits and are not typically considered income.
Although the per diem system can provide employees with an easy way to be reimbursed for certain work-related expenses, employers who do not follow their own policies or IRS regulations may commit violations that result in disputes with employees.
Common Types of Per Diem Violations
Some of the common reasons for per diem violations include:
- Employer does not have a set policy – Under IRS regulations, employers have the choice of accounting for each expenditure or using a per diem rate plan. If they do not have a set plan, employers may not keep track of receipts or know how to receive reimbursement for their expenses.
- Nonpayment of per diem requests – An employee may follow the employer’s policy only to have their request for reimbursement or compensation denied.
- Rejected per diem reimbursement – Employers may reject requests for per diem reimbursement if they believe that the expense was not necessary or reasonable, such as for the payment of alcohol during a work-related dinner.
- Immigration issues – Some employers include per diem benefits in their calculations of prevailing wages. However, this practice is controversial since per diem payments are not taxed as income so stating that it is part of the worker’s income is contradictory.
If you believe that your employer has committed a per diem violation, it is important that you speak with an experienced employment lawyer who can advise you of your legal rights and options.
