Per Diem and Travel Pay for Traffic Control Crews

Traffic control work goes where the road is, and some of the road is a long way from the yard. Once a company starts taking work outside comfortable driving distance, two questions arrive together and get muddled: what do we pay people for being away, and what do we pay them for the time spent getting there.

They are different questions with different rules. Getting them straight matters for payroll compliance, for job costing, and for whether out-of-area work is actually worth doing.

This is an orientation, not tax or legal advice. Per diem structure and wage-and-hour treatment both have real consequences, and your accountant and employment counsel are the people to settle them with.

Per diem: what it is and what the IRS publishes

Per diem is a flat daily allowance covering lodging, meals and incidental expenses while an employee is travelling away from home for business, paid in place of reimbursing actual receipted costs.

The IRS publishes annual guidance on substantiating these amounts. The current notice is Notice 2025-54, which sets out three things worth knowing:

The high-low substantiation method. Per diem rates of $319 per day for travel to any high-cost locality and $225 for any other locality within CONUS, with $86 and $74 of those amounts respectively treated as the meals portion. High-cost localities are those with a federal per diem rate of $272 or more, listed in the notice with the portions of the calendar year they apply.

The special transportation industry M&IE rates — $80 CONUS and $86 OCONUS. Note carefully: these apply to taxpayers in the transportation industry as defined in the underlying revenue procedure. Do not assume a traffic control crew qualifies. That determination belongs to your accountant.

The incidental-expenses-only rate — $5 per day.

The notice is effective for allowances paid to an employee on or after October 1, 2025, for travel away from home on or after that date, and it supersedes the prior year's notice.

The alternative to the high-low method is using the locality-specific federal per diem rates, which are published by GSA and looked up by destination and date through the GSA per diem rates lookup. GSA sets rates federal agencies use to reimburse their own employees; private employers commonly reference them, and rates for Alaska, Hawaii and US territories are set by the Department of Defense while foreign rates are set by the State Department.

Two practical points. First, look the rate up for the actual destination and date rather than carrying a remembered figure — rates change annually and vary by locality and season. Second, whether your arrangement results in taxable wages depends on how it is structured, and that is worth getting right at the outset because unwinding a year of incorrectly treated payments is unpleasant.

Travel pay is a completely separate question

Per diem is about expenses. Travel time is about wages, and it is governed by federal and state wage-and-hour law rather than by tax guidance.

The rules around which travel time is compensable are genuinely intricate, and they differ between federal law and various state laws — several states are more protective than the federal baseline. The variables that typically matter include whether travel is within the normal workday, whether it is home-to-work or work-to-work, whether the employee is driving or riding, and whether they are required to report to a yard first.

That last one is worth flagging because it is so common in this trade. A crew that reports to the yard, loads devices, and then drives to the job is doing something structurally different from a crew that drives from home directly to the site. Which of those your crews do — and whether it varies by person or by day — has consequences you should confirm with counsel rather than infer.

Where prevailing wage applies, travel and per diem may interact with the applicable determination as well. Wage determinations are published by the Department of Labor and looked up per locality and construction type at SAM.gov; the reporting obligations that follow are covered in certified payroll for traffic control contractors.

Why this belongs in job cost

Both per diem and travel time are direct costs of doing a specific job in a specific place. Both are routinely booked as general expenses, and both therefore vanish from the comparison between a job forty minutes away and one three hours away.

The consequence is predictable. A company that costs out-of-area work without its travel and subsistence costs concludes that distant work is comparably profitable, bids accordingly, wins it, and slowly discovers that its margin is worse than its local work without being able to say why. Since out-of-area jobs are usually the ones taken to fill a slow period, the error compounds seasonally.

What to route to the job:

• per diem paid, per crew member per day
• lodging if paid directly rather than through per diem
• compensable travel hours at the loaded rate
• vehicle cost for the travel, not just for the work

The framework this feeds is in job costing for traffic control companies, and the loaded rate the travel hours should be costed at is built in flagger labor cost per hour.

Pricing out-of-area work

Once the cost is visible, pricing gets more honest in three ways.

A minimum job size for travel distance. Below a certain revenue, a three-hour drive cannot be recovered no matter what the rate is. Knowing that number stops you bidding jobs you should decline.

Multi-day beats daily commuting, past a threshold. Six hours of round-trip driving per day for five days is thirty compensable-ish hours and five days of vehicle cost. Lodging plus per diem for four nights is frequently cheaper and produces more productive site hours. That comparison is only possible if both sides are costed.

Crew willingness has a price. Away work competes with people's lives, and the per diem rate is part of how you compete for the crews willing to do it. Setting it at the bare minimum is a false economy in a trade where retention is the dominant labor cost — the argument is in hiring and retaining flaggers.

Recording it without creating a payroll mess

Three habits prevent nearly all of the administrative pain.

Capture per diem days on the job record, at the time. A crew member's per diem eligibility for a given day is a fact known on that day by the person who was there. Reconstructing it from a schedule at month end produces both overpayments and disputes.

Type travel hours distinctly from work hours. They may be paid the same or differently, and they should be visible separately regardless — for job costing, and because if a wage-and-hour question ever arises, "we cannot tell which hours were travel" is a bad answer.

Keep the arrangement written down and consistent. Who is eligible, at what rate, from which trigger, with what documentation. Per-person, per-job improvisation is where both compliance risk and crew resentment come from, and the two tend to arrive together.

If crews are already recording hours against jobs on a digital ticket, adding per diem eligibility and travel-time typing to that capture is close to free. If hours arrive on paper and get re-keyed, this is one more thing to re-key — which is the general argument in migrating off spreadsheets.

The short version

Per diem covers expenses while away and follows IRS substantiation rules — currently $319 high-cost and $225 other CONUS under the high-low method, with the transportation industry special rate carrying an eligibility definition you should not assume applies to you. Travel pay covers time and follows wage-and-hour law, which varies by state. Both are direct job costs and both should be captured at the job, on the day, by the person who was there.

Settle the structure with your accountant and counsel once, write it down, and then make the recording automatic. Traffic OS captures travel hours and per diem days against the job alongside everything else on the ticket, priced in flat monthly tiers rather than per user. Bring a distant job that felt profitable to a walkthrough and see whether it was.