Per diem

Per diem meaning

The work per diem is latin for per day or for each day. It has different meanings in different contexts, but usually refers to a fixed amount paid by a business to an individual to cover business expenses. It can also refer to people who work per diem, whose working hours vary from week to week.

Per diem payments

Per diem payments refer to the amount of money a business allots to an employee for daily expenditure to cover any expenses incurred during work hours when travelling for business. A per diem payment could cover anything from lodging to travel expenses and mileage when on a business trip. Your employer might pay you a per diem rate when you travel for work, where you would receive a set amount of money for each day that you are working away from your normal working location. Alternatively, you would have to keep track of outgoings yourself and send a detailed expense report to your employer with supporting receipts to prove the amounts spent whilst travelling on business. A per diem payment alleviates this administrative burden.

In the United States, companies and organizations use the per diem rate guide published by the General Services Administration (GSA). The GSA establishes a per diem rate for hotels based on average daily rates in the local hospitality industry. Rates vary in different locations and time of year, and are broken down into two categories: lodging and meals and incidental expenses (M&IE).

A main advantage of using per diem payments is that they are not considered wages, therefore do not fall under the umbrella of taxable income. However, if the payment is more than the federal per diem rate the excess will be taxed as ordinary income. Per diem rates can change every year, and the tax laws can be complex. Consult a tax specialist if you need further information about your company's per diem policy.

Per diem work

People who are employed per diem work only on days where they are called in to work. This is very different from having a part time or full time job as they are employed by the day. A per diem employee usually does not receive the same benefits as full time employees, and they are paid a per diem rate by the day. A typical example of a per diem employee would be a substitute teacher. In healthcare, it is a position where the professional's working hours vary week in week out depending on both the employer's need and employee's preference. You are never guaranteed hours as a per diem employee, unlike part-time and full-time staff.


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