Write a Per Diem Policy People Can Actually Follow

Here is the fastest way I know to test a per diem policy. Hand the draft to a payroll clerk and to an electrician who just drove in from out of state, ask each of them to work out what Tuesday pays, and compare the dollar amounts and the reasons.

If the answers differ, the policy is not finished.

A sloppy policy can also end in back wages. In June 2015 the U.S. Department of Labor announced that six Gulf Coast staffing agencies had agreed to pay back wages after investigators found part of their pay mislabeled as per diem. The table in the release adds up to $3,491,442 owed to 3,263 welders, electricians, pipe fitters and other craftspeople. "Workers don't often complain about receiving per diem pay in place of regular wages because they believe they make more money being paid this way," said David Weil, then administrator of the Wage and Hour Division. "The truth is these workers are losing out."

Eligibility starts with who actually spends money

Open the policy with one specific eligibility sentence. It should name the assignment, the work location, the distance or tax-home test the company uses, and the effective date.

The best checklist for that sentence came out of a 2016 enforcement case. RBT Welders paid $398,379 to 246 workers, Contractor Labor Services agreed to pay $118,128 to 107 more, and the agreements both firms signed with the department read like a policy outline. They had to "issue genuine per-diem payments only to employees who incur expenses on behalf of the employer." They could not pay per diem that corresponds directly with "the number of hours worked." They had to make sure workers understood and acknowledged what counts as a reimbursable expense. "Illegal per diem practices hurt law-abiding employers," said Betty Campbell, the division's regional administrator in the Southwest at the time.

So a local hire who sleeps in his own bed gets no per diem. Section 32d05a of the DOL Field Operations Handbook puts the entire payment in the regular rate when the worker has no added living costs. Its examples are a worker who is not required to live away from home and one who sets up a new residence at or near the job. In 2019 Apex Pipeline Service of Nitro, West Virginia, entered a consent judgment for $121,019 in back wages owed to 243 employees, plus the same again in liquidated damages. Investigators found, among other violations, that it paid union per diem by craft "regardless of the employees' travel status or the distance from home to worksite."

The October 1 rates do not cover a Monroe hotel room

State the dollar amount, or point to a dated rate schedule. Two federal tables change on October 1. IRS Notice 2026-60 sets the high-low rates at $329 a day for high-cost localities and $230 everywhere else in the continental U.S., for allowances paid on or after October 1, 2026 for travel on or after that date. The meals portion stays at $86 and $74. The old figures were $319 and $225, according to IRS Publication 463. The GSA's FY2027 bulletin raises the standard lodging rate from $110 to $113 and keeps meals and incidentals at $68. On GSA's rate page, a first or last travel day pays $51.00.

A company already on the high-low method this year keeps it through December, and Rev. Proc. 2019-48 lets it use either the old or the new rates for those three months if it applies them consistently to everyone on the high-low method.

Now look at Richland Parish, Louisiana, where Meta's Hyperion data center is going up. The Hampton Inn in Monroe recently quoted $380 a night, and a Hampton Inn in Baton Rouge typically runs about $120, Tyler Bridges reported in The Advocate in August. Billy Clay, who turned 10 acres of his Holly Ridge farm into the Cotton Patch RV park, charges $1,000 a month for a space with the electrical hook-up, water, Wi-Fi and garbage pickup. The FY2027 GSA lodging figure for Monroe is the $113 standard rate. GSA's own FAQ says "hotels are not required to honor the federal per diem rates," and lodging taxes are not included.

A flat allowance tied to GSA would not rent that room.

So the policy has to say, in its own labeled section, whether the company books and pays lodging directly or pays an allowance. If the company does pay above the federal rate, Publication 463 says the excess goes in box 1 of the W-2 as wages, and the amount up to the rate goes in box 12 under code L. On the overtime side, 29 CFR 778.217 treats a travel reimbursement at or below the Federal Travel Regulation or IRS amount as per se reasonable, and a "disproportionately large" excess goes into the regular rate.

Keep attendance money out of the per diem line

This is where most policies I have read go wrong.

The clearest case comes from healthcare staffing, but a crew job has the same design problem. In Clarke v. AMN Services, the staffing firm deducted $18 from weekly per diem for each hour a traveler missed until the end of 2014. After that it cut by the shift, and it prorated even for absences covered by paid sick leave. The Ninth Circuit held in February 2021 that the per diem worked as pay for work and belonged in the regular rate used for overtime. On the firm's "banked hours" system the panel wrote, "There is no plausible connection between working extra hours one week and incurring greater expenses the next." The Supreme Court declined to take the case. The Fifth Circuit reached the same result in 2010 in Gagnon v. United Technisource, an aviation case in which a painter got $5.50 an hour straight time plus $12.50 in per diem for every hour he worked, up to 40 a week. The district court had awarded him $4,266.82 in back overtime pay.

Data center builders do pay for showing up. Bisnow reported that workers are offered bonuses for the days they show up, for overtime and for the number of cables laid. Put that on its own wage line, in the regular rate, and leave per diem alone. Scotty Wristen, who owns WE Electric in Abilene, lost five workers to the data centers, which pay $35 an hour plus overtime and per diem against his $20, the Texas Tribune reported. "Some of them were guys that I've had for eight years, five years," Wristen says. Workers near big data center projects can be pulled away by bonuses or larger per diem rates, PYMNTS wrote, summarizing a New York Times report.

Write down what a rained-out day pays

The worker is still away from home when the site shuts, and the motel still bills. AMN got one thing right in Clarke. It did not cut per diem when the hospital cancelled a shift the traveler was ready to work.

The Sierra County inside wireman agreement on file with the California Department of Industrial Relations pays $64 in Zone 2 and $80 in Zone 3 when a worker "is not permitted to work, due to weather conditions or lack of material," and pays subsistence only for the part of the day worked by someone who quits partway through an eight-hour day. The Kern County agreement defines a subsistence "day worked" as at least half the scheduled hours, or a day when a reporting payment is required. The DOL handbook also allows half the daily rate for someone who comes home at noon.

Travel days need the same care. Publication 463 allows three-quarters of the daily meal amount on departure and return days, or any method applied consistently. Under 29 CFR 785.39, overnight travel during normal working hours is work time, and the same clock hours count on a Saturday or Sunday too, while riding as a passenger outside those hours is not counted. A worker who flies home on days off is not away from home while there. Cooper, a project manager from Kansas City who gave The Advocate only his first name, sees his wife every two weeks. "Every flight out of Monroe is full," he says. A policy that sets the rotation in writing saves arguments later; the post on planning a travel rotation covers the schedule side.

Name the record, the clock and the person who fixes mistakes

Rev. Proc. 2019-48 still requires the worker to substantiate the time, place and business purpose of travel, so the policy should name the one document that controls, whether that is the daily sign-in or the approved time record. Do not make the traveler guess whether a foreman's text outranks the spreadsheet.

Publication 463 gives ready-made deadlines. An advance goes out no more than 30 days before the expense, the worker accounts for the spending by day 60 and returns any excess by day 120. The Los Angeles County wireman agreement reimburses parking weekly, but only if the worker hands in "a signed and dated receipt for each parking expenditure." That is the whole receipt rule, in one sentence.

Corrections need a named role, a named channel and a response time the team can meet.

Extension notices need the fastest route to payroll. The IRS treats an assignment as temporary only while it is realistically expected to last one year or less, and Publication 463 uses a construction worker sent from Los Angeles to Fresno for what was expected to be nine months; after eight months he was asked to stay seven more, and only his first eight months of travel costs were deductible.

This article is general information, not tax or legal advice. Check your own situation with a CPA, an enrolled agent or a lawyer.

Sources

1. Notice 2026-60, 2026-2027 Special Per Diem Rates, Internal Revenue Service, September 2026.
2. Rev. Proc. 2019-48, Internal Revenue Service, effective November 26, 2019.
3. Publication 463 (2025), Travel, Gift, and Car Expenses, Internal Revenue Service, updated April 30, 2026.
4. GSA Per Diem Bulletin FTR 27-01, U.S. General Services Administration, August 18, 2026.
5. Frequently asked questions, per diem, U.S. General Services Administration, accessed September 29, 2026.
6. FY2027 per diem rates for Monroe, Louisiana, U.S. General Services Administration, accessed September 29, 2026.
7. 29 CFR 778.217, Reimbursement for expenses, Legal Information Institute, amended December 16, 2019.
8. 29 CFR 785.39, Travel away from home community, Legal Information Institute, accessed September 29, 2026.
9. Field Operations Handbook, Chapter 32, U.S. Department of Labor Wage and Hour Division, accessed September 29, 2026.
10. Federal enforcement effort finds more than 3,000 Gulf Coast workers owed nearly $3.5 million in back wages by staffing agencies, U.S. Department of Labor, June 22, 2015.
11. Welders, pipe fitters along Gulf Coast to be paid $516K in back wages, U.S. Department of Labor, September 7, 2016.
12. U.S. Department of Labor Investigation Results in West Virginia Construction Company Paying $242,039 in Back Wages and Damages, U.S. Department of Labor, December 23, 2019.
13. Clarke v. AMN Services, LLC, No. 19-55784, opinion, U.S. Court of Appeals for the Ninth Circuit, February 8, 2021.
14. AMN Services, LLC v. Clarke, Public Citizen, accessed September 29, 2026.
15. Gagnon v. United Technisource, Inc., U.S. Court of Appeals for the Fifth Circuit via FindLaw, May 27, 2010.
16. Travel and subsistence provisions, Electrician: Inside Wireman, Sierra County (61-401-1), California Department of Industrial Relations, 2026.
17. Travel and subsistence provisions, Electrician: Inside Wireman, Kern County (61-428-1), California Department of Industrial Relations, 2026.
18. Travel and subsistence provisions, Electrician: Inside Wireman, Los Angeles County (61-11-1), California Department of Industrial Relations, 2026.
19. From RV camps to packed hotels, Meta data center project has LA parish bursting at the seams, Tyler Bridges, The Advocate, August 21, 2026.
20. Private Jets, Huge Raises And 'Man Camps': How Data Center Builders Are Luring Workers In Short Supply, Patrick Sisson, Bisnow, November 12, 2025.
21. Data centers, Texas home builders compete for electricians, Sneha Dey, The Texas Tribune, April 28, 2026.
22. Data Center Gold Rush Sparks Big Paydays for Electricians, PYMNTS, July 29, 2026.