For independent contractors, can a contractor charge for travel time is a big question that can affect their prices and bottom line. However, as a field service business grows or a construction company hires a larger crew, this question goes from individual to team consideration.
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This isn’t just about cash flowing in but keeping track of where your money is going and if your costs are working at their most efficient. Everything comes with a price, but some are worth more than others. While spending can seem unavoidable, it’s important to remember that your costs can be adjusted to give you the best bang for your buck.
Can a contractor charge for travel time as part of a field service business? The answer depends on the context, laws and contract.
So, let’s look at the nitty-gritty and answer this question!
Understanding travel time and compensation in construction
Managing a team of full-time and part-time workers differs from hiring a one-off or temporary contractor. For field service businesses and trade companies, the distinction is essential.
It’s not an independent contractor factoring travel into their rates or charging a separate fee; businesses need a consistent policy on how travel time and relevant compensation are handled, especially when reviewing your budget and process.
So what can a contractor charge for travel time, can a worker charge for it, and when does it count?
Contract type
As mentioned, independent contractors often include the cost of travel in their overall pricing. When moving between field service jobs, it’s challenging to be able to judge how long a trip will take or how a route will be laid out.
Can a contractor charge for travel time, or is it folded into the overall cost of a charge? Independent contractors can include the time for flexibility in their fees as part of their overhead rather than labor and materials. These may include temporary contracts with professionals outside of your business.
Full-time and part-time workers have a different relation to hours. The contract type here is vital to consider, as these contracts have a set amount of hours before they count as overtime. Part-time and full-time team members will be scheduled and have clock-in and clock-out times to track.
Running a field service or construction business with contracted employees means you must be consistent about crew timesheets and time-tracking. It’s important to consider all elements of how the job gets done during hiring and contracting.
Distance and location
Field service can be tricky to organize, especially when managing a fleet and varied jobs.
If crew are expected to clock in at a physical office or pick up a fleet vehicle before starting work, then the commute to that office or depot will be counted as personal time, outside of business pay. All work-related travel after that clock-in will, therefore, be compensated.
We’ll expand more on the legal side of this later in the article.
Nature of work
This is key in deciding if a worker can charge for travel time, as the context matters. For example, a delivery driver’s job is to travel from place to place with the recipients and schedule open to daily, weekly or monthly changes. Travel is part of their job and integral to the operation of a delivery service.
The same can be applied to anyone who needs to travel between jobs. Let’s look at federal and state labor laws for clarification and the legal side.
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Federal and State Labor Laws for travel time compensation
It’s vital to get acquainted with the labor laws and guidelines that cover travel regarding work to ensure everything is above board and that you and your crew are on the same page.
We’ll start with Federal guidelines and move through the different levels of laws and contracts affecting compensation requirements and rates.
Fair Labor Standards Act (FLSA) guidelines
According to federal laws, can a contractor charge for travel time? The Fair Labor Standards Act (FLSA) states that time spent by an employee as part of their principal activity is work time and must be counted as hours worked. This includes travel to job sites and during work hours if involved in their principal activity.
In short, time spent for work during work hours needs to be paid. Contracts outline the principal activity of a worker and the roles they are expected to fulfill. For those in field service roles and contracting, getting between job sites is part of the job and, therefore, needs to be paid time. But how it’s charged and paid depends on the contract.
So, can a contractor charge for travel time? Or is it folded into the cost? We will go over different contracts later in the article to cover how this time is covered.
State Laws
The FLSA standards might be the federal standard, but state laws and guidelines also apply to compensation for travel time and the classification of work travel time vs. commute. Depending on the state, they can also cover exceptional circumstances, such as one-time trips and overnight trips.
Depending on where your field service business operates, check the relevant state laws surrounding travel time. You never know what quirks your state of operation may have compared to the FLSA and others.
For example, can a contractor charge for travel time in New Jersey, and are the standards the same? In NJ, employers are required to compensate workers for travel time at the regular rate of wages. It differs, state to state, in terms of pay rate and circumstances.
Distinction between commuting and work-related travel
When asking if a contractor charges for travel time, the type of time in question is essential, as referenced above, the FLSA guidelines clarify that travel to jobs and during work must be compensated.
So, what is the difference?
Commuting time is time spent traveling from home to a place of work. The FLSA regards this as personal time and isn’t expected to be covered by the business as ‘work’ time.
Variable commutes are the classification of commutes that most trades and field service work will fall under. Field service businesses often compensate by having a ‘radius’ of operation: they work in certain suburbs or locations, so contractors know roughly the region they’ll be taking jobs.
Can a contractor charge for travel time if the distance of the job is outside of their usual commute?
As we expanded above, this place of work can have some variation without necessitating compensation for commute time. However, if jobs are assigned that will cause a contractor to travel longer than usual or leave their everyday work area, this additional travel time needs to be compensated as work travel.
We’ll look to the next point to understand and recognize this distinction.
Record-keeping requirements
Without diligent record-keeping, you can’t be sure whether a job is out of the ‘usual.’
Keeping track of jobs, time spent, and pay rates is essential to ensure everything is running efficiently and strike a balance. For example, if a worker spends more time traveling than others, that could suggest adjusting their schedule or finding a better fit for those jobs. Or it could indicate that there’s demand for work in an area your field service business hasn’t expanded in (yet.)
Records provide a wealth of data that can be useful for your business's growth. Great contractors and workers will keep clear and consistent documentation of their work and time spent.
The short of it is that if you can’t see the information, you can’t make decisions based on what is happening!
Taking Charge of Travel Time
With a larger team, problems multiply as your field service business or trade company takes on more significant projects and grows the crew.
But with growth and experience comes the chance to streamline and improve processes across the board, including travel times. With software like ClockShark’s time tracking, take charge of your documentation in one robust app!
