Do Employers Have to Pay for Meals While Traveling?

Business travel prompts frequent questions about who is responsible for meal costs incurred on the road. The answer depends on a combination of federal and state laws, as well as individual company policies. Understanding these layers is the first step for an employee to know if their travel meals are a reimbursable business expense.

Federal Reimbursement Guidelines

The Fair Labor Standards Act (FLSA) does not have a specific provision that forces employers to reimburse employees for travel-related meal expenses. The FLSA’s main concern is ensuring employees receive at least the federal minimum wage for every hour worked. This creates an exception where an employer must reimburse an employee for job-related expenses, including meals during travel, if failing to do so would cause the employee’s weekly earnings to fall below the federal minimum wage.

For this rule to apply, the travel must be considered compensable work time. For example, if a non-exempt employee earning the federal minimum wage works a 40-hour week and spends $50 on meals during required travel, the employer must reimburse that $50. Without reimbursement, the employee’s effective pay would be below the federal minimum. The reimbursement must be paid no later than the regular payday for that period.

State-Specific Meal Reimbursement Laws

While federal law sets a baseline, several states have enacted their own laws that provide more direct employee protections regarding business expenses. These state-level mandates often require employers to reimburse employees for all necessary costs incurred while performing their job duties, a category that includes meals during business travel. This obligation exists regardless of the employee’s wage rate, unlike the FLSA’s minimum wage-focused rule.

For instance, California law requires employers to indemnify their employees for all necessary expenditures they incur as a direct consequence of their job duties. This has been consistently interpreted by courts to include the cost of meals while traveling for business. Other states, including Illinois, Massachusetts, and Montana, have similar legal requirements built on the principle that employees should not have to finance their employer’s business operations.

Company Policies and Reimbursement Methods

When an employer chooses or is required to reimburse for travel meals, they use one of two methods: paying for actual costs or providing a per diem allowance. Reimbursing actual costs involves the employee submitting proof of spending, and the employer pays them back for that exact amount. A per diem allowance provides the employee with a fixed daily amount to cover lodging, meals, and incidental expenses.

Many companies base their per diem rates on guidelines published by the U.S. General Services Administration (GSA). The GSA sets standard rates for different locations, reflecting the local cost of living; for example, the rate for meals and incidental expenses (M&IE) is higher in more expensive cities.

The tax treatment of these reimbursements hinges on whether the company uses an “accountable plan,” as defined by the IRS. To qualify as an accountable plan, a policy must meet three tests: expenses must have a business connection, the employee must substantiate the expenses, and the employee must return any excess reimbursement. If a reimbursement arrangement meets these criteria, the payments are not considered part of the employee’s gross income.

If the arrangement does not meet all three requirements, it is a “non-accountable plan,” and all reimbursements are reported as taxable wages on the employee’s Form W-2.

Required Documentation for Reimbursement

To receive payment under an accountable plan, an employee must provide proper documentation to substantiate their expenses. This is a requirement rooted in IRS regulations for the reimbursement to be non-taxable. A detailed expense report should provide specific information for each cost.

For each meal, the report must include the amount of the expense, the date it was paid, and the place where the meal was purchased. It is also necessary to state the business purpose of the travel, such as the name of the client visited or the conference attended.

Keeping original, itemized receipts is the most effective way to substantiate these details, as an itemized receipt shows what was purchased. If a receipt is lost or for a small cash expense under $75, an employee may be able to provide a detailed log, though company policy dictates if this is acceptable.