Understanding Per Diem Employees: All You Need to Know

What Does Per Diem Mean?

Per diem refers to employees who work on an as-needed basis. These employees are not permanent or full-time but are hired on a temporary or part-time basis to fulfill specific job requirements. Per diem workers are commonly found in industries such as healthcare, construction, and hospitality, where there is a fluctuating demand for skilled labor.

Benefits of Hiring Per Diem Employees

1. Flexibility: Hiring per diem employees allows companies to quickly adjust their workforce according to workload fluctuations. This flexibility helps avoid overstaffing or understaffing, ensuring optimal productivity.

2. Cost-Effectiveness: Per diem workers are typically paid only for the hours they work, without additional benefits or long-term commitments. This can result in significant cost savings for employers, especially during slow periods.

3. Specialized Skills: Per diem employees often possess specialized skills or expertise that can be leveraged for specific projects or tasks. Employers can tap into this talent pool without bearing the full cost of hiring permanent staff.

Per Diem vs. Independent Contractor

While per diem employees and independent contractors are both considered non-permanent workers, there are some key differences between the two.

Per diem employees:

• Work on an as-needed basis for a specific period
• Receive hourly wages and may be eligible for benefits such as overtime pay
• Are subject to the employer's control and direction

Independent contractors:

• Work on a project or task basis
• Are typically paid a flat fee or per project
• Have more independence and control over their work

Pros and Cons of Per Diem Work

Per diem work offers advantages for both employers and employees, but it also comes with some challenges.

Pros:

• Flexibility in work schedule
• Opportunity to gain experience in different settings
• Potential for higher hourly rates

Cons:

• Inconsistent income and job security
• Lack of benefits such as health insurance or retirement plans
• Less opportunity for career advancement

Per Diem and Business Travel Expenses

In addition to its meaning in employment, per diem is also used to refer to the amount of money employees can spend on travel expenses. When employees travel for business purposes, companies often provide a daily per diem allowance to cover meals, lodging, and incidental expenses.

Per Diem Policies for Success

Implementing effective per diem policies can help companies streamline their travel expense management and ensure compliance. Consider the following guidelines:

• Set Clear Allowances: Define specific per diem rates for different locations to account for varying costs of living and travel expenses.
• Establish Spending Limits: Clearly communicate the maximum amounts that employees can spend on meals, lodging, and incidentals.
• Require Documentation: Ask employees to submit receipts or expense reports for reimbursement, even when per diem allowances are provided.

Conclusion

Per diem employees play a vital role in many industries, offering flexibility and cost savings for employers while providing opportunities for individuals seeking temporary or part-time work. By understanding the concept of per diem and implementing appropriate policies, companies can effectively manage their workforce and business travel expenses.