Frequently asked questions answered by
Alice herself:
If an employee misses his carpool ride to a job site due to him oversleeping, do we need to reimburse him for his mileage if he drives using his own vehicle?
If it’s a commuting expense than the answer is yes, reimburse them. It’s going to be a taxable expense if it’s not commuting. If it’s a temporary thing, you could, if you wanted to, reimburse him, but you don’t have to unless you’re in California or Illinois.
If an employer reimburses an employee for entertainment expense, is this taxable to the employee, since entertainment expenses are no longer deductible on the corporate tax return?
As far as I know, the answer is no. Tax reform didn’t touch the accountable plan rules. Those rules are still there. A lot of that discussion is in IRS Pub 463, and they talk about the non-deductibility of entertainment expenses. The problem is that they don’t really define what entertainment expenses are. It used to be that they are directly related to you, to the business, or associated with the business, but apparently the IRS has ditched those two tests, and they came up with a five-out-of-five-factor test for meals only, assuming that you know that the employee has incurred entertainment expenses on the company’s behalf. Then you could reimburse them tax-free. But I’m so uneasy about this that what I’m going to say is that you should require the employee to submit height and substantiation of this.
If an employee goes to just a luncheon, leaves at 11:30 and returns at 1:30, do we have to pay the extra hour pay for making them skip their lunch?
The FLSA does not require you to pay employees for their lunch breaks. That’s a matter of state law. Some states will require you to provide employees with lunch breaks whether or not you’d have to pay them for a missed lunch break. I’m not sure about that. You’d have to check with your state labor department for that one.
How detailed does the meal receipt need to be? Just the total amount or the line items of each item ordered?
The more detailed your meal receipts are, the better off you’re going to be, and there are two reasons for that. The first is that since your entertainment expenses are no longer deductible, employees who go to a combined meal/entertainment event, like a ballgame, the receipt will tell you what the amount was spent on meals and what was spent on entertainment, because entertainment expenses are no longer deductible. The second reason is that meal expenses will be deductible on your corporate return but they can’t be lavish or extravagant. They have to be ordinary and necessary in the conduct of your trade or business.
Can an employer pay a per diem rate and not require receipts?
Yes. That’s the purpose of per diems. If your per diem rate does not exceed the federal government rate, employees don’t have to account for the amount of the expense. That means they don’t need to submit receipts, but they must still provide you with an adequate accounting of where they traveled and the business they conducted.
If, while traveling, you experience unexpected delays that take you past normal business hours, is the extra time compensable?
So you’re sitting in an airport and you’re supposed to take off at noon and let’s say arrive at 7:00, and you’d normally quit work at 5:00, but you’re sitting and sitting, no, because it’s just normal work hours. If it runs over their normal commuting time – if it takes them 20 minutes to get to the office but 30 minutes to get to the airport, plus all that other time in the airport – as soon as you hit that 21st minute, you have to pay, so it doesn’t matter if there’s a flight delay. If they’re stuck overnight, I think you could probably not pay for sleeping time. But that’s not legal advice.
We live in California. Is it true we can pay a different hourly rate for travel than their working hourly rate?
I believe it is true. It is certainly true under the FLSA. I know that California has two very different rules about compensable time, and they have different minimum wages all over the state, but I am not aware of any law or any rule in California that says that you can’t pay employees in travel status at a different hourly rate, provided, of course, you’re at least paying the minimum wage. Again, that’s not legal advice.
