The Fair Labor Standards Act carries no requirement for privately owned companies to provide per diem pay. Despite that, many companies offer this benefit to employees who travel in order to retain a qualified workforce. Companies that choose to provide this benefit should clearly outline the payment policy and provide all employees access to the policy.

Understanding Per Diem

Per diem is a Latin phrase meaning 'per day' or 'by the day.' Employees who receive per diem pay receive a travel allowance to cover the daily expenses associated with travel. This may cover hotels, meals, airfare and car rentals, or may be paid as a mileage allowance to cover the wear and tear on the employee's vehicle. Many companies utilize a system that incorporates all of these facets. Employees then must submit a reimbursement request outlining the specific travel expenses incurred.

Union Rules

Employees covered under collective bargaining agreements are eligible for the negotiated per diem allowance that has been contractually agreed upon between the union and the employer. Employees must be able to provide authorization for the travel and the expense, as well as documentation for the amount paid. Reimbursement amounts must not exceed the authorized limits set by the union or exceed the standard per diem rates established by federal regulations.

Per Diem vs. Regular Pay

Employers are required under the FSLA to provide employees paid by the hour with a regular wage, as well as overtime if the employee works more than 40 hours during a week. Salaried employees are exempt from this requirement. Unfortunately, some employers attempt to circumvent this regulation through the use of per diem pay. This type of behavior is illegal. All employers are mandated by law to provide overtime at a rate of at least time and a half. Per diem, if necessary, should be paid in addition to this requirement and not be counted toward the regular hourly wage.

Standard Per Diem Rates

Each year, the federal government establishes standardized rates throughout the continental United States, Alaska, Hawaii and all its territories. Rates vary for meal allowances, incidentals, and hotel expenses by regions and metropolitan areas. For example, a per diem hotel rate for Manhattan, N.Y. would range between $200 to $300 depending on the time of year, whereas a hotel rate for Manhattan, Kan. would be $83. The rates are comparable to the expense of the location required for travel. As of 2013, the current mileage rate was 56.5 cents per mile.