there are several issues...
First of all - when you pay wages - you may set ANY hour rate as agreed between the employer and an employee - HOWEVER - federal and state labor laws dictate the MINIMUM rate you may use and overtime rate.
Otherwise - there is no limitations.
Regarding Per Diem that is reimbursed by the employer for business travels...
Such reimbursements are NOT included into taxable wages if paid under an accountable reimbursement plan.
In order to qualify as an accountable plan, your reimbursement or allowance arrangement must require that your employees meet all three of the following rules:
1. There must be a business connection to the expenditure. This means that the expense must be a deductible business expense incurred in connection with services performed as an employee. If not reimbursed by the employer, the expense would be deductible by the employee on his/her 1040 income tax return.
2. There must be adequate accounting by the recipient within a reasonable period of time. This means that your employees must verify the date, time, place, amount and the business purpose of the expenses. Receipts are required unless the reimbursement is made under a per Diem Plan.
3. Excess reimbursements or advances must be returned within a reasonable period of time. Reasonable depends upon facts and circumstances.
.So - when reimbursements are made BEFORE expenses are paid - the person is required to report all expenses and provide all receipts - including actual tickets. When not provided - the excess should be returned.
Regarding "we cannot exceed the 50/50 rule when paying per diem" - that might be established practice in your organization - but there is NO such requirement.
What are Per Diem rates?
Per diem is an allowance paid to your employees for lodging, meals, and incidental expenses incurred when
travelling. This allowance is in lieu of paying their actual travel expenses.
Per diem payments are not part of the employee’s wages if the payment is equal to or less than the federal per
diem rate and the employer receives an expense report from the employee.
You can pay more or less than the federal per diem rate. However, if you pay more than the federal per diem
rate, the excess will be taxable to the employee.
The report must include:
· The business purpose of the trip,
· The date and place of the trip, and
· Receipts for lodging (if using the meals-only per diem rate).
The employee must file the expense report with the employer within a reasonable period of time (60 days).
If any of these requirements are not met, the payment is taxable to the employee.
The per diem rate for M&IE includes the following items:
· All meals,
· Room service,
· Laundry, dry cleaning, and pressing of clothing, and
· Fees and tips for persons who provide services, such as food servers and luggage handlers.
There is not a per diem rate for lodging.
Let me know if you need any clarification.
I will schedule a phone service for you.