What Does Per Diem Mean for a Job?

Per diem is a Latin phrase meaning “by the day.” In the context of jobs, it has two related meanings: a daily allowance and daily pay.

 

As a daily allowance, per diem is your employer’s fixed sum to cover expenses such as meals during business travel. In terms of daily pay, it means you get paid for each day you work instead of receiving a regular salary or hourly wage.

 

Keep reading to learn more about how per diem work can benefit you and the types of jobs that offer per diem arrangements. 

 

Understanding Per Diem Employment

 

As seen above, per diem employment can come in two primary forms:

 

1. Per Diem for Travel Expenses

 

In this scenario, the per diem is an allowance provided by an employer. It covers the employee’s daily expenses incurred while traveling for work.

 

This might include:

 

     •  Accommodation: Costs associated with staying at a hotel, motel, or other approved lodging.

     •  Meals: A set amount to cover the employee’s daily food and beverage expenses.

     •  Incidentals: A smaller allowance for miscellaneous expenses like laundry, local transportation (taxis, buses), phone calls, and tips.

 

Now, this kind of per diem includes different types of payments. Let’s discuss them below.

 

Types of Per Diem Payments

 

Here are the commonly known types that match our first type of per diem in employment.

 

Fixed Rates

 

Fixed per diem rates are daily allowances your employer gives you to cover business trip expenses. Instead of keeping receipts for every meal or taxi ride, you get a set amount per day.

 

This amount is based on three things:

 

     •  Location: Big cities tend to be more expensive than small towns, so per diem rates will be higher in places like New York or London.

     •  Season: Travel costs can fluctuate depending on the time of year. During peak tourist seasons, you can expect higher per diems.

     •  Industry standards: Some industries, like tech or consulting, might have higher average per diem rates due to the nature of their work trips.

 

The key is to cover your basic expenses – lodging, meals, and incidentals (local transportation, laundry, tips) – within the daily allowance.

 

Let’s take a real-world example.

 

Say you’re a marketing rep traveling to Los Angeles for a conference. Your company provides a fixed per diem rate of $250 per day. This covers:

 

     •  Hotel: Aim for something comfortable, around $150-$175 a night.

     •  Food: Budget roughly $50 for meals (breakfast, lunch, dinner).

     •  Incidentals: The remaining $25 can go towards local transportation, laundry, or unexpected expenses.

 

Remember, per diem rates are estimates. Depending on your choices, you might end up spending a little more or less. The important thing is to be responsible and stay within the daily allowance provided by your employer.

 

Partial Payments

 

Partial per diems allow employers to pay employees for specific business travel expenses. This way, they don’t have to cover everything. Partial per diems are typically targeted allowances.

 

Common covered options include:

 

     •  Meals and Incidentals: This is the most typical scenario. Meals include breakfast, lunch, and dinner. Incidentals cover smaller expenses like laundry, tips, and local transportation.

     •  Meals Only: Some companies cover meals, lodging, and other costs for the employee.

 

What’s not covered? Partial per diems don’t cover everything.

 

Here are some usual exclusions:

 

     •  Transportation: Flights, trains, or car rentals might be a separate expense the employee pays for themselves.

     •  Lodging: Accommodation costs might not be included, especially for longer trips.

 

Reimbursement

 

In reimbursement per diem payments, you cover expenses upfront and later request reimbursement from your employer. This method ensures responsible spending.

 

For instance, you could get a per diem for meals. However, you’ll have to cover lodging costs and then ask for reimbursement.

 

Company Credit Cards

 

Some employers will issue you a company credit card. You can use it to pay for business expenses directly. 

 

This way, you don’t have to use your own money and then ask for reimbursement later.

 

Federal Per Diem Rates

 

The U.S. General Services Administration (GSA) sets federal per diem rates for government employees who travel for work. These rates serve as a guideline for many companies’ per diem policies.

 

They’re updated yearly and apply to both domestic and international travel.

 

2. Per Diem for Daily Work

 

 

Here, the per diem term perfectly applies to temporary per diem employees hired to meet specific company needs. An example is a construction project with phases. 

 

Per diem electricians might be brought in to wire a specific section, then move on to the next job when their part is complete.

 

Here’s how it works:

 

Unlike salaried employees who receive a fixed monthly paycheck, you, as a per diem employee, are paid a pre-determined rate for each day you work. This rate should cover your daily expenses and compensate you for your time.

 

Payment Rates and Calculations Involved

 

The payment rate for per diem employees typically includes the following components:

 

     •  Daily Rate: 

 

This is the set amount you get paid for each day you work as a per diem employee. You and your employer or agency usually negotiate this rate. 

 

They consider things like your skills, experience, and the job needs.

 

     •  Daily Expenses: 

 

To cover your daily expenses, the daily rate for per diem employees often includes money for meals, transportation, and other necessities. This can be a fixed amount or a percentage of your daily rate.

 

     •  Time and a Half:

 

If you, as a per diem employee, work overtime, you usually get paid at a higher rate, known as time and a half. It’s calculated by multiplying your daily rate by 1.5. 

 

This reflects the extra compensation for the additional hours worked.

 

Example Calculation

 

Let’s consider an example to illustrate the payment structure for per diem employees:

 

     •  Daily Rate: $150

     •  Daily Expenses: $25 (meals, transportation, etc.)

     •  Time and a Half: 8 hours of regular work + 2 hours of overtime

 

Calculation:

 

     •  Regular Work: 8 hours x $150 (daily rate) = $1200

     •  Overtime: 2 hours x $150 (daily rate) x 1.5 (time and a half) = $450

     •  Total Pay: $1200 (regular work) + $450 (overtime) = $1650

 

In this example, the per diem employee would receive a total of $1650 for the day, which includes their daily rate, daily expenses, and overtime compensation.

 

Benefits of Per Diem Work

 

Per diems offer several advantages, including:

 

Enhanced Schedule Flexibility

 

Per diem jobs often come with flexible schedules. You can pick which days you work, giving you more control over your time. This is great if you’re a student, have another job, or just like to have some free time during the week.

 

Potentially Higher Pay

 

Per diem rates are typically higher than hourly wages for similar jobs. This means you can earn more money for your time working.

 

Build Your Skills and Network

 

Working at different places with per diem jobs exposes you to new experiences and people. This can help you develop more skills and make valuable connections in your field.

 

Organize Your Per Diem Income with Paystub Hero!

 

Per diem work offers flexibility, but managing income from multiple jobs can be a hassle. Paystub Hero helps you stay organized by creating professional paystubs for each job.

 

Here’s how Paystub Hero streamlines your per diem finances:

 

     •  Create Clear Records: Generate professional paystubs that document your daily rate, worked hours, and pre-tax deductions for each job.

     •  Consolidated Information: Simplify tax filing and budgeting by having all your per diem income records in one place.

     •  Professional Presentation: Showcase your earnings and organization with polished paystubs.

 

Try Paystub Hero today!

 

FAQs

 

Here are the most commonly asked questions about per diems: