Understanding Per Diem Employment: Everything You Need to Know

Disclaimer: This content is provided for informational purposes only and does not intend to substitute financial, educational, health, nutritional, medical, legal, etc advice provided by a professional.

What is Per Diem Employment?

Per diem employment refers to a type of work arrangement where employees are hired on an as-needed basis. It is commonly used by businesses to fill temporary or part-time positions, especially in industries with fluctuating workloads or seasonal demands.

Unlike regular full-time or part-time employment, per diem employees do not have a fixed schedule or guaranteed hours. Instead, they are called in to work when their services are required. This flexibility benefits both employers and employees, offering greater staffing flexibility and additional income opportunities.

Per Diem Employees and Business Travel Expenses

One key aspect of per diem employment is the allocation of funds for travel expenses. When employees are required to travel for work-related purposes, they are often eligible for per diem allowances to cover their daily expenses, such as meals, accommodation, and transportation.

The amount of per diem allowance varies depending on the location and duration of the trip. It is typically calculated based on a predetermined rate set by the employer or government agencies. These rates are designed to cover reasonable expenses while ensuring employees are not overcompensated.

Pros and Cons of Per Diem Work

Per diem employment offers both advantages and disadvantages for both employers and employees.

Pros of Per Diem Work:

  • Flexibility: Per diem employees have the freedom to choose when they want to work, allowing them to balance work and personal commitments.
  • Additional Income: Per diem work can be a valuable source of extra income, especially for individuals who have other part-time or freelance gigs.
  • Opportunity for Skill Development: Per diem employees often work in various settings and gain exposure to different work environments, which can enhance their skills and knowledge.

Cons of Per Diem Work:

  • Uncertain Income: Since per diem employees are not guaranteed a fixed number of hours, their income can vary significantly from week to week.
  • Lack of Benefits: Per diem employees are typically not eligible for benefits such as health insurance, paid time off, or retirement plans.
  • Less Job Security: As per diem positions are temporary in nature, there is always a risk of not being called in for work when demand is low.

Accountable vs Non-Accountable Reimbursement Plans

Employers have two options when it comes to reimbursing per diem expenses: accountable and non-accountable reimbursement plans.

Under an accountable reimbursement plan, employees must submit detailed expense reports and provide receipts to justify their expenses. The employer reimburses the exact amount spent, and any excess funds must be returned. This type of plan is beneficial for both employers and employees, as it ensures the funds are used for legitimate business expenses.

In contrast, non-accountable reimbursement plans provide a fixed per diem amount regardless of the actual expenses incurred. Employees are not required to submit expense reports or provide receipts. However, any excess funds received are considered taxable income.

Per Diem Rates and Government Regulations

The General Services Administration (GSA) sets per diem rates for federal employees and contractors traveling on official business. These rates are based on the location and are intended to cover lodging, meals, and incidental expenses.

It is important for employers to stay updated with the current per diem rates to ensure compliance with government regulations. Failure to adhere to these rates can result in financial penalties or other legal consequences.

Using Per Diem for Your Small Business

If you own a small business, per diem employment can offer several advantages. Here are some key considerations:

  • Staffing Flexibility: Per diem employees allow you to quickly adjust your workforce based on demand, reducing labor costs during slow periods.
  • Cost Control: With per diem employment, you only pay for the hours worked, avoiding unnecessary expenses associated with full-time positions.
  • Access to Specialized Skills: Per diem employees often have diverse backgrounds and experiences, allowing you to tap into specialized skill sets as needed.

Conclusion

Per diem employment provides a flexible staffing solution for businesses and additional income opportunities for workers. Understanding the nuances of per diem work, including travel expense reimbursements and government regulations, is essential for both employers and employees.

By leveraging per diem employment effectively, small businesses can optimize their workforce and achieve greater operational efficiency.

Disclaimer: This content is provided for informational purposes only and does not intend to substitute financial, educational, health, nutritional, medical, legal, etc advice provided by a professional.