Glossary of Human Resources Management and Employee Benefit Terms
Per diem, meaning “for each day” in Latin, is a set amount of money an organization gives an employee each day to cover expenses while traveling for business. It can also be a payment for short-term workers who are paid a daily rate.
Employees traveling for business incur additional expenses outside of travel costs, like lodging and meals, and many expect to be reimbursed for these. Employers are not legally required to reimburse employees for travel expenses, but it is considered good business practice.
When using per diem rates, employees are given a fixed amount per day based on the city they are traveling to rather than submitting receipts. This eliminates the need for standard record keeping and simplifies the process.
The General Services Administration (GSA) releases per diem rates each year for the lower 48 states to give businesses guidelines for how much employees should be reimbursed. This is broken down by lodging, meals, and incidentals. For example, if an employee is traveling to Atlanta, GA in 2020, the GSA recommends reimbursing per day:
Continental breakfast/Breakfast: $16
Incidental expenses: $5
The GSA also includes a meals and incidentals rate suggestion for the first and last day of travel, which is generally 75 percent of normal expenses since the employee will not need the same number of meals or incidentals that day. GSA per diem rates can easily be looked up by state using the GSA website.
If an employee is traveling to a foreign location, consult the Department of State’s website.
Employers are not required to offer the federal per diem to their employees, but if you give employees travel funds above the federal per diem, the excess amount is considered taxable for the employee.
Per diem workers are paid by the day rather than by the hour or by salary. They can be either contractors or employees and are most frequently short-term workers brought in to fill gaps left by an employee on vacation or medical leave.