Returning Employees to the Office Post-Quarantine: Mileage & Commute Reimbursement
By: Erica Rocush
Now that the height of the COVID-19 pandemic and associated government quarantines are hopefully in the rearview mirror, employers are faced with a whole new set of questions they must address. Specifically, employers will be confronted with how to transition its remote workforce back to the office. One of those questions is whether, and how, employers need to reimburse workers for mileage, or pay for commute time for non-exempt employees who have been working from home but are now returning to work in the office on a part-time or full-time basis. The answer, under the federal Fair Labor Standards Act (FLSA), depends mostly on the location designated as the normal worksite for the employee. (Note that various states, most notably California, have specific laws that are not discussed by this analysis, which is limited to the FLSA standards.)
Designating a “Worksite”
The worksite designation is essential to the analysis because under the FLSA, normal commute time is not compensable, as explained in the U.S. Department of Labor’s Fact Sheet #22, which states that “[a]n employee who travels from home before the regular workday and returns to his/her home at the end of the workday is engaged in ordinary home to work travel, which is not work time.” However, if an employee who regularly works at a fixed location in one city is given a special one-day assignment in another city and returns home the same day, the time spent traveling to and returning from the other city is compensable work time, except that the employer may deduct/not count the time the employee would normally spend commuting to the regular work site.
Most importantly for deciding whether an employer must pay an employee to commute to the office is the FLSA’s requirement that employers have to pay for “excessive commute time” or commute time that is “substantially longer” than normal commute time, if the employee either has a normal job site and must commute to a different job site, or if the employee does not have a set work site and travels to different job sites. Unfortunately for employers, the regulations do not define what is “excessive” or “substantially longer.”
Applying the Worksite Designation
Let’s apply the above general principles to the return-to-work situation employers are now facing. Under this scenario, whether commuting time is compensable will depend upon whether the employee’s home or the office is designated as the place of work. If the employer designates the office as the normal place of work and only permits the employee to work from a home office occasionally or for the employee’s benefit, then the normal work site would be the office, and all commute time between the office and home would not be compensable, both at the start and the end of the day. So, if the employee regularly reports into the office most days, even if for just part of the day, the office would be the normal worksite and travel to and from the home to the office would not be compensable. If the employee then works part of the day from home, and does not do any additional travel for work, none of the commute time would be compensable. However, if the employee were to commute to the office, then home, then back to the office, then back home in a day, all of the travel other than the first and last commute of the day would be compensable unless the mid-day travel home was solely for the employee’s benefit (i.e. to run home for an errand with the expectation of returning to the office after the errand).
However, if the employer designates the employee’s home as the normal work location, and the employee generally works from home, then all time spent commuting to the office would be in addition to the “normal” commute time, which would be nonexistent, and would be considered compensable time for both trips. In order to continue to designate the office, rather than the employee’s home, as the normal worksite, there has to be a reasonable expectation by the employer and the employee that the employee will, at least on some normal basis, still report into the office, and that working from home is permitted for the employee’s benefit and not required. For example, an employee would have to have a regular workstation set up and available to the employee at the office, and there would have to be an expectation that, for example, the employee is expected to report to the office at least one day per week.
It also makes a difference if the employee is working from home voluntarily. If the employee is allowed to work from home as a perk, but the general expectation is that the job is based out of the office, then the normal worksite would be the office and the commute between home and office would be the normal commute and thus not compensable. If the employee is directed to work from home on a regular basis, then the home would be the normal worksite and travel to and from the office would be compensable.
The FLSA does not require as to reimbursement for mileage because there is no absolute requirement to reimburse for business expenses. However, if an employee’s unreimbursed business expenses would bring their wages below the applicable minimum wage or cut into overtime wages, then the employer must reimburse the expenses to bring the employee’s net pay up to the applicable minimum wage or overtime rate. Of course, employers must comply with any company policy or agreement between the employer and employee that mandates reimbursement for business expenses, including commuting expenses.
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