A complete guide into per diem meaning

If you travel for work, your employer may give you a per diem for expenses. This Latin phrase sounds complicated, but it’s actually fairly simple. A per diem is a daily allowance you receive for business-related travel expenses, like a hotel room or meals. Not sure how a per diem works and what it covers (or doesn’t)? We’ve put together this helpful guide so you’ll know how to use a per diem on your next business trip.

In this guide, we’ll cover everything you need to know about this allowance, including:

• What per diem means for employees

• How it works, including what’s usually covered and what’s not

• The benefits of receiving per diem payments for work-related travel

• Answers to other questions about the per diem meaning for a job

What does per diem mean?

In Latin, per diem means “by the day.” It’s a daily allowance that an employee receives for business-related expenses while traveling for work. These expenses usually include:

• Accommodations, like lodging or rental expenses

• Meals and food

• Incidentals, such as gratuities, room service, or fees

In some cases, per diem also refers to a compensation structure that pays an employee by the day, rather than an hourly wage or a salary. Some companies use this pay structure for temporary or short-term employees, such as travel nurses.

How per diem works

Private companies set their own per diem rates and policies for employees. Some companies give their employees credit cards to use for business expenses, while others provide checks or petty cash. While many companies provide per diem at the start of a trip, others may require you to pay for travel costs out of pocket and then reimburse you after you return.

Usually, companies establish a flat rate for per diem payments. You’re expected to use this payment to cover all or part of your expenses for the day. Depending on the company, however, a per diem may not cover certain costs, such as transportation or mileage.

If you’re planning to travel for work, you can ask your manager or consult the employee handbook to learn more about your company’s travel policies. That way, you know exactly how much you’ll receive and what you can use the allowance for on your trip.

Benefits of per diem

When you’re traveling for work, your expenses can add up quickly. Between your lodging, meals, and other costs, it can be expensive to travel. Per diem offers a way to cover your expenses while you’re on the road for work.

Some benefits of per diem include:

• It’s easier than tracking your expenses. When you receive a flat per diem, you generally don’t have to keep receipts and submit reimbursement claims. It minimizes the amount of paperwork you need to do, which can save you some time—and hassle.

• It helps you budget for your trip. When you know the per diem you’ll receive each day, you can budget for your trip. You’ll know how much you can spend on meals, for example, so you don’t have to cover additional costs.

• It helps you prioritize your expenses. You can use a per diem to prioritize your expenses. You can easily adjust your spending because you know how much money you have for the day.

• It’s not taxable income. Generally, the per diem you receive isn’t considered taxable income. You won’t have to pay income taxes on this reimbursement.

FAQs about per diem

Have some other questions about per diem? Review these answers to frequently asked questions:

Who can receive per diem?

Any employee who travels on behalf of a company can receive per diem. Federal employees receive per diem at set rates established by the government. Corporate employees receive daily allowances set by their employers.

Some companies also offer per diem for contractors or freelancers. For example, if you travel to complete a freelance assignment for a company, you may receive per diem payments for relevant expenses.

What’s the per diem job meaning?

In some cases, per diem refers to a job, rather than a travel allowance. A per diem job is one where you receive daily compensation for your work. Usually, it applies to contractors or temporary employees. For example, if you’re temporarily filling in for a full-time employee who’s sick or on vacation, you might receive per diem pay.

Some common per diem jobs include:

• Substitute teacher

• Travel nurse
  

• Construction worker

• Truck driver

• Phlebotomist

Do you want a new job that allows you to travel? Using Career.io’s career coaching service, you can work with a personal expert on ways to enhance your job search or make a career transition!

Key takeaways

1. Per diem is an allowance you receive from your employer each day while traveling for work.

2. You can usually use this allowance to pay for lodging, meals, and incidentals, but it may not cover all costs, such as transportation.

3. Receiving a per diem can be helpful for budgeting and prioritizing expenses on a business trip.

4. Per diem can also refer to jobs that pay daily compensation, rather than a salary or an hourly wage.