Payroll in Practice: 3.18.2024

Question: An employer provides a company automobile for an employee to travel to a temporary job site where the employee will stay for several days. Is the travel between the employee’s home and the job site considered business or personal use of the vehicle and, if business use, must the employee’s travel time be compensated?

Answer: In general, an employee’s travel from home to work before the start of the regular workday and from work to home at the end of the workday is normal travel or commuting. Use of an employer-provided vehicle for commuting is personal use. However, use of an employer’s vehicle to travel to a job site that is outside of the metropolitan area of the employee’s regular work location constitutes business use of the vehicle.

IRS Publication 463, Travel, Gift, and Car Expenses, explains that transportation between home and a main or regular place of work is commuting. If the employee does not have a regular or main work location, travel between home and a temporary job site outside of the employee’s metropolitan area would qualify as business travel. Travel between home and a temporary job site within the employee’s area would be personal commuting.

Under the Fair Labor Standards Act, if travel that is part of an employee’s principal job activities, such as travel from job site to job site during the workday, the travel time must be counted as hours worked. This includes situations when an employee is required to report at a meeting place to receive instructions, perform other work, or pick up and carry tools. Travel from the designated place to the job site is part of the day’s work and must be counted as hours worked. This time is counted regardless of contract, custom, or practice. Such travel time is not considered commuting.

When an employee reports to the employer’s premises but is sent to another job site and is required to return to the employer’s premises after completing the job, that travel time is working time. However, if the employee is not required to return to the employer’s premises, and instead goes home, the travel home from the job site is work-to-home travel and is not hours worked.

There are instances when travel is business travel instead of commuting and may constitute hours worked for wage and overtime purposes. Regulation 29 CFR 785 discusses travel time in Sections 785.33 through 785.41.

In one example, an employee who returned home from work is called to travel a substantial distance to perform emergency work for a customer of the employer. The travel time, both to and from home, constitutes hours worked and business use of an employer vehicle.

If an employee is given prior notice, as for example, the employee is told on Friday to perform work required at a customer’s place of business on Saturday, it would not be considered an emergency call outside the employee’s regular working hours. Still, it is a temporary job site away from the employee’s regular work location, and therefore the travel would be considered business travel even if the temporary location were within the employee’s metropolitan area.

The regulation specifically states that the Wage and Hour Division is not taking a position on whether travel in response to a similar emergency call to return to the employee’s regular place of business is working time. However, the WHD’s “Field Operations Handbook” says that such travel time is not counted as hours worked. This is consistent with the IRS position that travel between home and a regular work location is commuting. Use of the employer’s vehicle in this situation is personal use.

The situation is a bit different when an employee who regularly works at a fixed location in one city is given a special one-day work assignment in another city. For example, an employee who regularly works from 9 a.m. to 5 p.m. in City A, receives a special assignment in City B, which is three hours from City A by rail. The employee drives to the rail station to take the 8 a.m. train, arrives at the work location, completes the work late in the afternoon, and arrives back at the City A rail station at 7 p.m.

This is not ordinary home-to-work travel that is incidental to employment. Instead, it was performed for the employer’s benefit at the employer’s special request to meet the needs of the particular and unusual assignment. Therefore, the travel qualifies as an integral part of the principal activity the employee was hired to perform on that particular workday.

The travel for this one-day assignment is similar to the travel involved in an emergency call and travel between job sites. However, not all the time involved must be counted as time worked. For special one-day assignments, travel between home and the rail station could be excluded from time worked because it falls within the home-to-work category. The usual meal break time also may be excluded. However, use of an employer vehicle to drive to the point of public transport is business use of the vehicle.

Travel is considered to be away from home if the time the employee is required to be away from the employee’s regular place of business or tax home is substantially longer than the employee’s normal workday. Also, there must be a reasonable need for the employee to sleep or rest while away from home. The time away may be less than 24 hours.

For example, an employee is required to attend an evening meeting several hours away from the employee’s tax home. The employee works at the regular work location from 8 a.m. to 3 p.m., attends the meeting from 6 p.m. to 10 p.m., then checks into a hotel for the night. The employee returns to the regular work location at 11 a.m. the following morning.

This column does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., or its owners.

Author Information

Patrick Haggerty is the owner of a tax practice in Chapel Hill, North Carolina, and an enrolled agent licensed to practice before the Internal Revenue Service. The author may be contacted at phaggerty@prodigy.net.

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