Do we have to pay employees a per diem when they travel?

California law does not set a fixed per diem for employees who travel on behalf of a company. Under Labor Code section 2802, employers must reimburse employees for all necessary expenses incurred while performing their duties, including meals and lodging.

Employers can either:

• Pay a daily per diem to cover meals and lodging, or
• Reimburse employees for actual expenses submitted with receipts, up to reasonable limits.

A clear expense reimbursement policy should outline how to claim expenses, submission deadlines and prior approval requirements. Deadlines cannot be used to withhold reimbursement, and employees can claim unpaid expenses for up to four years.

Per diem is not considered wages and must be sufficient to cover reasonable travel costs.

For help determining reasonable per diem rates, review both the state of California and the federal government allowances for their employees at the California Department of Human Resources, and the U.S. General Services Administration. The Internal Revenue Service also provides information on per diem rates.

Private California employers are not required to use these rates, but they are useful guidelines and may be more readily accepted as reasonable by a court or the state Division of Labor Standards Enforcement.

Read more about Expense Reimbursement in the HR Library.