Attorneys James T. Carey and P. Zachary Stewart

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What are per diem rates and how do they work?

On Behalf of | Aug 5, 2021 | Overtime And Wage Issues

Employees in West Virginia might have questions about per diem allowances. Who qualifies, and what are the rules? Per diem is a Latin term that translates to “by day.” Employers may reimburse the actual expenses of employees with travel duties, or they may choose to provide per diem allowances calculated by prescribed rates. 

The General Services Administration (GSA) establishes per diem rates for lodging, meals and incidental expenses. These allowances could be nontaxable and not recorded as wages or salary. The employer must establish an accountable plan with specific criteria for the allowances to be treated as per diem. 

Criteria to validate an accountable plan 

The employer must reinforce the following rules to validate an accountable plan: 

  • All expenses paid from the allowance must be connected to the business. 
  • The employee must submit a detailed report to account for the expenses. 
  • The employee must return excess allowance money within a reasonable time. 

The expense report must include the amount, place, time and business paid for accommodation, meal or incidental expense. 

A potential source of disputes 

Choosing this method of compensation to cover employees’ travel-related expenses could become complicated. Especially in cases involving various situations and circumstances. Employees who do not fully understand the per diem system might regard it as unfair. 

As with any other wage and overtime disputes, the perceived unfairness of per diem allowances might lead to conflict and frustration. Employees in West Virginia who are unsuccessful in resolving the issue with the employer are free to seek legal guidance.