Travel Expenses for Employees: Who Should Pay, and How?

The question of who should pay for travel expenses when employees travel for work is a common concern in many organizations. Typically, it is the responsibility of the employer to cover these expenses, but the specifics can vary widely by company and industry. This article will explore the common practices and provide clarity on what expenses are covered, the need for pre-approval, and the procedures for reimbursement or direct payment.

Common Practices in Travel Expense Management

Most companies have a travel policy that outlines what expenses are covered. This can include transportation (flights, car rentals, mileage), lodging, meals, and incidentals. Whether employees need pre-approval for travel expenses, the process for reimbursement, and whether expenses will be paid directly by the company, all depend on the specific company's travel policy. It is crucial for employees to refer to their employer's travel policy for detailed guidelines.

Examples of Company Policies

Let's consider a scenario involving CDL-holding drivers who travel frequently for work. In this example:

The company covers no work clothes, food, or drinks consumed during the trip. The company does not pay for speeding tickets, unless they are related to mechanical issues or other uncontrollable circumstances. The company pays for repairs to the vehicle and tickets resulting from safety violations related to the company's vehicles. To illustrate, a driver was given two tickets: a $200 ticket for failing to wear a seatbelt, which the employee must cover as it is not a company-financed expense, and a $2200 ticket for a safety violation related to the vehicle.

Case Study: Handling Stranded Drivers

The scenario illustrated in the example becomes more complex when an employee gets stranded due to a mechanical failure. For instance:

Who pays for the employee's lodging, dinner, and breakfast? When does the employee stop getting paid for that day, and when does the clock start again? Is the employee paid from the moment they left the plant to the moment they get back?

In such situations, the employer must provide basic necessities, such as lodging, dinner, and breakfast, until the employee is back on track. This may include providing a room in a motel and authorizing the use of company funds for necessary expenses. Items like cigarettes and beer do not count, but coffee and a bag of chips would. The employer may also consider allowing the employee to make phone calls and directing the charges to be recorded as business expenses.

Important Considerations and Legal Implications

It is essential to understand that not all expenses are tax-deductible. For example, tickets for meals and entertainment are only 50% deductible, making travel expenses similar. The tax implications must be carefully considered, and all expenses must be documented and supported by receipts.

These considerations are not just about the financial aspect but also about maintaining positive relationships with employees. Proper handling of these situations can help prevent misunderstandings and maintain trust between employer and employee.

Conclusion

The responsibility for paying travel expenses can vary, but it is typically the employer's role. Pre-approval procedures, reimbursement methods, and pre-paid arrangements are all common practices. Employee travel policies should be clear and comprehensive to ensure that both parties understand the expectations and obligations.