If a company pays a der diem to a contractor to be pay its employees while traveling, is it legal for the contractor to keep a portion of that money for itself?

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If a company pays a der diem to a contractor to be pay its employees while traveling, is it legal for the contractor to keep a portion of that money for itself?

I work for a an inspection company that covers the entire west coast. The oil companies that hire my company to do inspections provide a per diem to cover our lodging, food, and expenses during travel to their various locations. My company receives the per diem money, spends part on hotels, gives us a set amount, and pockets the rest. Is it legal for my corporation to not disperse the per diem funds provided? An example would be that the hiring company A pays $140 per day in per diem, then company B disperses $35 to the employee, pays $50 for hotel, and keeps $55?

Asked on January 18, 2012 under Employment Labor Law, Washington

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

It is, unfortunately, perfectly legal. An employer is not required to provide a per diem to employees at all; and a client is not required to provide one to a contractor or vendor. So if the client oil company contracts with the inspection company, and the contract includes a per diem, that is paid to the inspection company; and the inspection company, as your employer, then decides what to do with it, how much to remit to you, etc. It is unfair; but unfair does not always mean illegal.


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