Travel and Expenses: US

This Travel and Expenses policy explains how your organization reimburses employees for reasonable, necessary business costs, and how to handle travel time and expense records in a way that aligns with federal wage and hour rules and IRS documentation expectations. It supports compliance with the Fair Labor Standards Act travel-time principles in 29 CFR Part 785 and the treatment of certain reimbursed expenses under the overtime regular rate rules in 29 CFR 778.217, and it tracks the IRS record-keeping and substantiation guidance in Publication 463. 

A clear, employee-friendly approach helps prevent pay issues for non-exempt employees, avoids surprise out-of-pocket costs, and sets consistent expectations for approvals, receipts, and safe, cost-effective travel.

The History Behind Travel and Expenses Policies in the US

Travel & Expenses policies took shape as wage-and-hour rules became more actively enforced. The Fair Labor Standards Act (FLSA) set a federal floor for pay practices in 1938, and Department of Labor guidance later pushed employers to treat certain employer directed travel time as compensable work time. The DOL's travel time rules in 29 C.F.R. Part 785 drew lines between ordinary commuting and work travel, which is why modern policies focus so much on pre approval, documentation, and consistent time reporting.

Expense reimbursement became a wage issue when employees fronted costs that effectively pushed pay below minimum wage or muddied overtime calculations. Federal rules like 29 C.F.R. 778.217 require employers to separate true business expense reimbursements from payments that function like extra wages, and sloppy reimbursement practices can distort the "regular rate" used for overtime. On top of that, IRS accountable plan rules (often summarized in Publication 463) pushed employers toward receipts, business purpose, and timely substantiation so reimbursements could stay non taxable, which is also why company cards and submission deadlines show up in nearly every travel and expense policy.

Which Law is the Travel and Expenses Policy Meant to Comply With?

If you create and distribute a Travel and Expenses Policy for your US-based employees, you should take steps to ensure it complies with the federal Fair Labor Standards Act (FLSA) travel time rules (29 CFR Part 785), the federal FLSA rules on reimbursed expenses and overtime calculations (29 CFR 778.217), and the IRS's Publication 463 (Travel, Gift, and Car Expenses).

How to Write a US-Specific Travel and Expenses Policy

• Start with "why" and introduce the concept.
• Set the standard that reimbursable expenses must be reasonable, necessary, cost-effective, and for business purposes.
• Require advance approval before employees spend money, especially for larger expenses and business travel.
• Define the main categories of reimbursable expenses (travel, meals, job supplies, and professional development).
• Require documentation and a consistent submission process for reimbursement requests.
• Address pay considerations for travel time for non-exempt employees.
• Set rules for company credit card use and consequences for unauthorized or personal charges.
• Include travel safety, health, and public health expectations when employees plan and take work trips.

When to Include this Policy in Your Employee Handbook

The law does not require you to publish a policy or issue a specific notice. That said, you still have to comply with the requirements that apply to you as an employer.

Even when notice is not required, this is still the kind of policy most employers should put in their handbook or otherwise publish to employees. It answers a question employees will ask, sets expectations, and gives managers a consistent script. If you do not include it, you will end up explaining it ad hoc, and that is when inconsistency, resentment, and accidental noncompliance shows up.

Other Considerations

This applies to US employers who have at least 1 employee in the US.

Exceptions

None.