Including Travel Stipend When Calculating Overtime?

singersoll

We pay our employees $15 (taxable income) for each day that they work at another location. My question is whether these payments should be included in overtime calculations.

TXHRGuy

The "regular rate of pay" is used for all overtime calculations.  It is determined by dividing an employees total remuneration for employment by the total hours worked in the same week as the total remuneration was earned.

Total remuneration is defined as all payments for "for employment paid to, or on behalf of, the employee".  However, there are some payments excluded.  [29 USC 207(e)] Payments that may be exluded include gifts, payments for time off (such as vacation, holidays, etc.), business expenses reimbursed to employees, awards, retirement plan payments (such as 401(k) match), premium pay and discretionary bonuses.

Total hours is not really defined in the statute because the statute itself does not define "work", but there is case law and the portal-to-portal act.

 Assuming that you have typical and accepted measures of total hours, the question is whether or not the $15 constitutes a business expense reimbursement or an award.

See also http://compensation.blr.com/compensation/how_to_calculate_overtime.cfm where BLR clarifies "The regular rate must include: the reasonable cost of meals, lodging, and other facilities provided to the employees (NOT for the benefit of the employer), nondiscretionary bonuses, on-call pay, shift differentials, and cash benefit payments from Section 125 Cafeteria Plans and other forms of compensation not specifically excluded from overtime laws by the FLSA."

Emphasis added.  If you are telling people they're getting this money to pay for meals, lodging, or other facilities for their own benefit because they are working off-site, then it's part of the regular pay.  I would be careful of trying to couch it as a discretionary bonus because a) everyone who works offsite probably gets it and b) what exactly is the purpose of the bonus?  If you can't come up with an answer to b) that doesn't make you smile about what a clever disguise it is for paying people for the cost of meals, then you should probably include it.  Anything that isn't explicitly excluded in the statute must be included.  So, if you are going to exclude these payments from yuor calculation of the regular rate of pay, you should have an ironclad mapping from an exemption in the statute to what the payment is for, what you have said it is for, what your documentation says it is for.

Personally, without more information, I'd include it.

singersoll

Thanks for your detailed response. Based on what I have read and your response, I think we need to include it. The $15 reimbursement is to help with the cost of traveling to our other worksites that are more than 25 miles away from the employee's main work site, when they work at that site all day.