Per Diem is a Latin phrase that means “per day” or “each day” and often refers to paying an individual a set daily allowance (sum of money) for each day they work or operate away from home.
The purpose of the daily allowance is to support certain living costs for individuals who are either required to travel for work or work solely on a per day basis.
Per Diem pay is often utilized on short work periods or on a per assignment basis and may be calculated by employment status, state/government regulations, distance and travel costs.
The the way Per Diem pay works can vary based on the job and responsibilities of the individual.
Here are some examples of ways people earn Per Diem pay.
Example 1: In the healthcare field a nurse may choose to do Per Diem (per day) work so that they can set their own schedule or pick up additional shifts whenever they need to make a little extra money. If the nurse is a contractor and does not work for an employer they may choose to work solely on a Per Diem basis, which means they are working on a contract and are not employed by the organization they are working for.
The nurse may also choose to do Per Diem work in addition to working for an employer in order to earn a little extra money.
Example 2: In a retail business a manager who operates a store may be required to travel for work and may earn Per Diem pay in addition to their regular salary to cover various expenses such as food, gas and other costs, so the Per Diem pay that is awarded to the employee helps offset their daily costs while they travel.
Example 3: A flight attendant may be awarded a specific Per Diem rate for every day they spend away from home or out of country, even when they are not performing their flight attendant duties as they still have a number of living expenses such as food and other basic expenses, which their Per Diem pay is designed to cover. If the flight attendant ends up away from home beyond a specified period of time (such as a week) the airline may offer a higher Per Diem payout to compensate for the extended time away from home.
Depending on the job an individual works for they may be paid a higher Per Diem “Per Day” rate if their work extends beyond a specified amount of time or if there are additional travel and distance costs.
Per Diem pay vs hourly/salary pay
While some jobs may pay individuals solely on a Per Diem basis you should not confuse Per Diem pay with hourly or salary pay.
As mentioned earlier many individuals such as retail managers and flight attendants earn a daily allowance in addition to their regular salary when their work requires them to travel, however there are also careers in which an individual may or may not travel, but is paid Per Diem for contractual work.
Nurses that wish to set their own schedule and not work for a specific employer may choose to take on Per Diem work as they can decline work shifts they do not want and choose only the ones they do want.
They can also choose to work several days a week or only once a week among other options.
In short Per Diem pay may be based on whether or not an individual is an employee or contractor and any distance/travel costs associated with their work.
Per Diem pay may be based on:
- Contractual work (working on contract, but not an employee)
- On call work (an employee that is required to be on call, such as a flight attendant)
- Distance and travel expense (an employee who works at a fixed location with a set schedule, but is required to travel for work)
How Per Diem pay works
When it comes to traveling for work Per Diem pay may cover all or only part of the expenses that are incurred during work travel.
For example if an individual is traveling to a meeting and the airline and apartment/hotel the employee is staying in has been paid for in advance by their employee then they may be awarded Per Diem pay for their meals with all of the regular travel expenses being covered.
If on the other hand the employee is driving to the location and the apartment/hotel is not covered upfront then the employee may earn Per Diem for their meals, but have to save their gas, tolls and lodging expenses for reimbursement.
In some situations an individual may be given a business card to cover any Per Diem expenses or they may be required to use their own money (out of pocket) and be reimbursed later.
Individuals who are being reimbursed for travel expenses need to make sure they keep all of their receipts and understand what their daily allowance is.
If the company covers $100 per night for a hotel, but the employee spends $150 per night they may only be reimbursed the $100 and be personally responsible for the other $50.
Each company operates differently regarding how they handle costs, so it is important to know what is included in Per Diem pay and what is not as well as anything that may require reimbursement or non Per Diem based costs.
Careers that offer Per Diem pay
As mentioned earlier there are a number of different careers from travel to healthcare that offer Per Diem work and the amount of money that can be earned is dependent upon employment status, contractual agreements, government/state regulations and distance/travel expenses.
While this is an incomplete list here are a few of the careers that offer Per Diem work:
- Travel industry jobs
- Healthcare jobs
- Government jobs
- Contractual work
- Retail/commercial jobs that require travel
Although these are some of the most common jobs that Pay Per Diem almost any job that requires travel can offer Per Diem pay to compensate for travel expenses.
Pros and Cons of Per Diem Work
Per Diem work has a number of pros and cons that often depend on the individuals goals and desires.
As mentioned earlier individuals such as nurses or contractors may choose to work solely on a Per Diem basis, which allows them to focus on their hobbies, take care if their children or just bring in a little extra money home when it’s needed.
The freedom and flexibility of Per Diem work provides individuals with opportunities to work around other important goals rather than being fixed to a set schedule.
For those who are employed such as flight attendants or retail/commercial workers Per Diem pay allows these individuals to earn a set daily allowance while they are away from home in addition to their salary in order to cover their daily living expenses, and if they spend less money while one their travel then the Per Diem they earn it can be a nice way to take home a little extra income.
Another excellent thing about Per Diem work is that some of these jobs allow individuals to travel to new locations and take on different challenges rather than being stuck working in the same location every day.
Some employees may also choose to do Per Diem work in addition to their regular work as a way earn more money when they need it.
- More flexibility with work schedule
- Traveling to new locations
- More diversity in terms of work and responsibilities
- Ability to potentially earn additional money
As far as the cons of Per Diem work go there are some downsides.
For example individuals who work exclusively on a Per Diem (contractual) basis may not receive medical benefits, sick pay or vacation time as they are not an employee.
Also some jobs that pay on a Per Diem basis may not offer stable pay and the hours that are available can go up or down significantly based on the companies needs.
If the Per Diem work requires frequent travel some individuals may find themselves home sick and not like the idea of constantly being away from family and friends.
Lastly, if Per Diem pay is designed to cover only part of the daily expenses it can be frustrating having to collect receipts and wait for reimbursement of no Per Diem based costs.
- Per Diem work may not offer stable pay
- May require lot’s of time away from home
- May not have medical benefits, sick days or vacation time
- May need to manage expenses
As you can see Per Diem pay offers a lot for those who enjoy flexibility, travel and diversity.
It also provides employees with the ability to earn a little extra money in addition to their regular salary.
However for those who rely exclusively on Per Diem pay it may not be a reliable source of income if money is tight and the lack of benefits, sick pay and vacation time may be a bit discouraging.