Do Employers Have to Pay for Meals While Traveling?

The question of whether an employer must cover meal expenses during business travel depends on a combination of federal and state laws and the specific reimbursement structures a company adopts. The answer is not a simple yes or no. Understanding these overlapping factors is necessary for both employees seeking fair reimbursement and employers aiming for legal compliance.

Federal Reimbursement Guidelines

Under federal law, there is no broad mandate requiring employers to reimburse employees for the cost of meals while traveling for business. The primary federal statute governing pay, the Fair Labor Standards Act (FLSA), does not compel reimbursement for such expenses.

The FLSA’s requirements become directly relevant only when unreimbursed expenses would effectively reduce an employee’s weekly earnings below the federal minimum wage. An employer cannot require an employee to cover business-related costs if doing so causes their pay for that workweek to fall below the minimum wage threshold. For example, if a non-exempt employee who earns the federal minimum wage of $7.25 per hour works a 40-hour week, their gross pay is $290. If that employee is required to pay $50 for meals during a mandatory business trip and is not reimbursed, their effective hourly rate becomes $6.00, a violation of the FLSA. In this specific scenario, the employer must reimburse at least enough to ensure the employee’s effective wage meets the minimum standard.

State-Specific Meal Reimbursement Laws

While federal law sets a baseline, several states have enacted their own laws that create a more direct obligation for employers to reimburse for business travel expenses, including meals. These state-level requirements are independent of the federal minimum wage rule and apply to all employees, regardless of their pay rate. Employers operating in these jurisdictions must adhere to these stricter standards.

The most well-known example is in California, which mandates that employers reimburse employees for all necessary expenditures incurred as a direct consequence of their job duties. This explicitly includes the cost of meals while traveling on business. Other states have similar statutes that require reimbursement for expenses made at the employer’s request. An employer in a state with such a law cannot simply decide not to reimburse for travel meals, as failure to do so can result in wage claims and penalties.

Common Reimbursement Methods and Policies

When employers do reimburse for travel meals, whether by choice or legal obligation, they typically use one of two primary methods: actual expense reimbursement or a per diem allowance. The actual expense method is where the employee pays for their meals and is later reimbursed for the exact amount spent. This method requires careful record-keeping, as the employee must submit receipts or other proof of purchase for each expense. Companies using this model often establish policies that set reasonable limits on meal costs.

An alternative is the per diem allowance, a fixed daily amount provided to an employee to cover lodging, meals, and incidental expenses incurred during business travel. This method simplifies expense reporting, as it generally eliminates the need for collecting and submitting individual meal receipts. Many companies that use per diem allowances base their rates on the guidelines published annually by the U.S. General Services Administration (GSA). While private employers are not required to use these rates, they serve as a widely accepted benchmark for what constitutes a reasonable allowance.

Tax Treatment of Meal Reimbursements

The tax implications of meal reimbursements for an employee depend on how the employer’s policy is structured. When a company’s reimbursement policy qualifies as an “accountable plan” under IRS rules, the money an employee receives for travel meals is not considered taxable income. To qualify as an accountable plan, a reimbursement arrangement must meet three criteria:

• The expenses must have a clear business connection.
• The employee must adequately substantiate the expenses to the employer in a timely manner.
• The employee must return any reimbursement or allowance in excess of the substantiated expenses within a reasonable period.

If a reimbursement policy meets all three of these conditions, the payments are excluded from the employee’s gross income and are not subject to income or employment taxes. Conversely, if a reimbursement arrangement fails to meet one or more of the accountable plan requirements, it is classified as a “non-accountable plan.” Under a non-accountable plan, all reimbursements are treated as taxable wages. The payments are added to the employee’s regular income, reported on their Form W-2, and are subject to federal income tax withholding, Social Security, and Medicare taxes.