FLSA2004-3 — Meal expenses and Section 7(e)(2)

U.S. Department of Labor
Employment Standards Administration
Wage and Hour Division
Washington, D.C. 20210

May 13, 2004
FLSA2004-3
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Dear
Name*,

I am writing in response to your request for an opinion regarding whether reimbursement for certain
employee meal expenses may be properly excluded from the employee’s “regular rate” of pay under the
Fair Labor Standards Act (FLSA). As you know, Section 7(e)(2) of the FLSA allows for an exclusion from
the regular rate when an employer reimburses an employee for expenses incurred in the furtherance of
the employer’s interests, such as reasonable payment for travel expenses.

Your client requires that his or her employees frequently travel out of town to work. They are paid by the
hour and receive time and one-half their hourly rate when they work more than 40 hours per week. In
addition, your client reimburses them for actual out-of-town expenses such as tolls, gas, lodging, all
meals, and on rare occasion repair of company property. You wish to know whether it is acceptable under
the FLSA to exclude from the regular rate reimbursement payments that are made for the meals an
employee eats while in travel status. You state that you wish a response from this office that your client
may rely on under Sections 259 and 260 of the Portal-to Portal Act, an “absolute defense” to any claims
of a violation of the FLSA.

Although you state that you find 29 CFR 778 (copy enclosed) to be unclear on the subject of meal
reimbursements, focusing on the context in which the meal occurs should clarify the regulatory guidance.
For example, section 778.217(d) mentions employee lunches in the discussion of reimbursement for
“expenses personal to the employee.” An employer ordinarily may not exclude from an employee’s
regular rate of pay the payment for costs that an employee would ordinarily incur for his or her own
benefit. In other words, if an employer reimburses an employee for expenses normally incurred by the
employee for the employee’s benefit, then the employer is increasing the employee’s regular rate by the
amount of the reimbursement. On the other hand, section 778.217(b)(4) does allow an exclusion from the
regular rate when an employer provides “supper money,” or a reasonable amount given an employee to
cover the cost of supper in a situation where he or she would ordinarily leave work in time to have supper
at home, but instead must remain to work additional hours for the employer’s benefit.

Similarly, section 778.217(b)(3) allows the exclusion from the regular rate of payments that an employer
makes as reimbursement of over-the-road expenses incurred when an employee travels on his or her
employer’s business. You state that this is the case for your client’s employees. In this situation the
regulation allows an exclusion from the regular rate for transportation, travel expenses and “living
expenses away from home” [italics added]. Certainly the phrase “living expenses” includes the cost of
food, and the necessity of eating meals away from home is an additional expense that the employee
incurs for the employer’s benefit. Thus, your client may properly reimburse employees for the cost of their
meals while traveling for work, and exclude this payment from the employee’s regular rate of pay.

Please note that section 778.217(c) cautions that any payments to an employee which are
disproportionately large or which are not reasonably approximate to the employee’s expense will be
included in the employee’s regular rate of pay.

This opinion is based exclusively on the facts and circumstances described in your request and is given
on the basis of your representation, explicit or implied, that you have provided a full and fair description of
all the facts and circumstances which would be pertinent to our consideration of the question presented.
Existence of any other factual or historical background not contained in your request might require a
different conclusion than the one expressed herein. You have represented that this opinion is not sought
by a party to pending litigation concerning the issue addressed herein. You have also represented that
this opinion is not sought in connection with an investigation or litigation between a client or firm and the
Wage and Hour Division or the Department of Labor.

We trust the above information is responsive to your inquiry.

U.S. Department of Labor
Employment Standards Administration
Wage and Hour Division
Washington, D.C. 20210

Sincerely,

Tammy D. McCutchen
Administrator

Enclosure

Note: * The actual name(s) was removed to preserve privacy.

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