More people are telecommuting than ever before. Some of this is temporary, but many companies (and employees) realize that permanent telecommuting is better for everyone involved. Other workers are telecommuting part-time or coming in solely to attend meetings.
This brings up an issue: While employees do not need to be compensated for regular commutes, they need and deserve travel compensation. How do you know when a trip into the office for a remote employee constitutes travel, according to IRS regulations and wage and labor laws in California?
Essentially, when do you have to pay a worker who normally commutes for coming into the office?
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When Are Employers Responsible for Paying Travel Time for Telecommuting Employees?
In general, normal commuting time is non-compensable. This includes commuting time for employees who are in the office two or three days a week on a regular schedule. You are not required to pay your employees for the time they spend commuting.
However, you are required to pay employees for time spent traveling between job sites. This can lead to the argument that if their home is a job site, then they should be paid for the time spent coming into the office. As the remote worker does not have a standard commute time, then any time spent coming in is in addition.
Employers are generally not required to pay for standard commutes even when an employee reports to multiple locations, unless the commute is “substantially longer,” which can apply to employees who telecommute. The less frequently you require the employee to report to the office, the more likely you will be expected to pay for their travel time.
Also, in California specifically, you have to pay employees for travel time if you require them to use your transportation (such as a shuttle bus) rather than their own. This comes up rarely, as in most cases, employee shuttle buses are an option, not mandatory.
In other words, if Betty is working in the office three days a week and telecommuting two, you should not pay for her commute. However, Jane, who telecommutes full time, should be paid for the time spent coming into the required monthly meeting.
If you have remote workers who live far away and are reporting for infrequent meetings, then you might come up against another travel time rule. Generally, you only have to compensate for travel time during an employee’s regular work hours, unless they have to work during the trip.
However, California requires employers to compensate for time spent driving, as a passenger on another mode of transportation, or obtaining tickets/checking baggage. This is not the case in all states. You can, however, pay your employee less than their normal hourly rate. Exempt employees do not need to be paid for travel time.
You can get around this by never having telecommuting employees report in, but it’s sometimes necessary. For example, you may need to bring everyone into work on a project that requires all hands on deck and can’t be done remotely, such as sending out a large physical mailing. You might also bring employees in for face-to-face meetings at intervals to help support company culture.
What are the Penalties for Noncompliance?
It’s essential to get it right. All companies have to comply with the California minimum wage laws, even if you only have one employee (or only one employee in the state). If you are in California and have remote workers who come into the office, the California Labor Code may also apply.
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Penalties for noncompliance can include enforcement proceedings and civil liability. In most cases, noncompliance comes up when an affected employee sues you for breaking the rules. Your liability insurance may not cover these kinds of suits, which might include back pay, liquidated damages, and waiting for time penalties, which apply to terminated employees.
For example, Jane lives in New Mexico, but you need her to fly into San Diego for a meeting. You fail to pay her for the time she spends sitting on an airplane. She finds out that while that is not compensable time under Federal law, it is in California, and that California law applies. She sues you, and you are forced to pay her back wages and possibly liquidated damages. You might have to pay her the $20/hr you usually pay her, or you might have to pay her twice the minimum wage. Plus, you will probably have to cover her legal costs.
This can be pretty hefty for what might be seen as a simple mistake.
All of this is extremely complicated, and this is where partnering with a PEO comes in. A PEO has the expertise needed to help you determine when travel time must be paid, especially when dealing with complicated telecommute situations.
While regular commuting time is non-compensable, different rules can apply to telecommuters who rarely come into the office. These rules can get particularly complicated when dealing with remote workers in different states. A PEO can help you keep all of these rules straight and avoid liability for mistakes. Check out our blog to find out more.
