How does per diem work for employers?
John Johnson
Updated on April 02, 2026
By definition, per diem (which is Latin for “by the day”) is reimbursement paid to employees for lodging, meals, and incidental expenses incurred during business-related travel. Employers can use a per diem rate to reimburse employees for combined lodging and meal costs, or for meal costs alone.
What does it mean when a job pays per diem?
Per diem payments are daily allowances paid to employees to cover costs incurred while on a business trip. Most firms use the standard rate set by the federal government as a guideline for their per diems. Per diem payment also refers to the structure of compensation received by some workers who get paid daily.
Who is eligible for per diem pay?
The IRS has implemented internal guidelines for its employees that include: 1) the required commute must be greater than 40 miles from an official station or residence; 2) the per diem expenses must be incurred while performing official travel; and 3) the employee must be in travel status for more than 12 hours but …
What is the per diem rate for 2021?
$55.00
| State | Number Per-Diem Destinations | Average Meals & Incidentals Rate |
|---|---|---|
| California | 59 | $62.86 |
| Colorado | 64 | $59.67 |
| Connecticut | 8 | $60.63 |
| Delaware | 3 | $57.33 |
How is per diem pay calculated?
Multiply the per diem allowance by the number of days. For example, on a three day business trip with a per diem meal expense allowance of $50, total per diem equals 3 X $50, or $150.
What is per diem and what rates do I pay my employees?
Per diems on the first and last days of travel are 75% of the total daily allowance. What if I pay less than the federal per diem rate? You also don’t have to compensate your employees at the federal rate. If you choose to pay less, the IRS offers two choices for setting your per diems:
What kind of jobs can you get with per diem?
Advertisements list per diem roles that pay by the day or by the shift, which is often the case when industries need workers on short notice or typically rely on temporary workers. The roles may also be on an as-needed basis. A few per diem positions include substitute teachers and contract workers.
Do you have to submit receipts for per diem?
Generally, reimbursement requires employees to submit receipts and expense reports to get their money back. The U.S. General Services Administration sets per diem rates that vary throughout the country. Businesses can choose to pay this amount for each day employees travel for business rather than make them file expenses.
Which is an example of a per diem schedule?
This daily schedule usually consists of several days of employment for a per diem employee asked to fill in for a sick or vacationing employee. Two examples are substitute teachers and health care workers that are paid by the day.
