WHEN YOU'RE ENTITLED TO THEM AND WHEN YOU'RE NOT
"Per diem" is Latin for "per day." The government permits an employee to receive a tax-free payment, up to a certain amount based on the cost of living in a particular geographic area, as compensation for lodging, meals, and miscellaneous expenses, when the employee is "away from home." "Away from home" means the employee is required to be away overnight. An employee is NOT entitled to a per diem when the employee sleeps in his or her main home and commutes between that home and the employee's jobsite. What this means is that a nurse who lives in Santa Ana can't get a per diem for working at a hospital in Anaheim when that nurse comes from his or her home to the worksite and goes home and sleeps and at home at the end of the workday.
Here's the legal analysis:
The payment of “per-diem allowances” to health care professionals, including but not limited to when those professionals were not away from their homes but instead were commuting between their homes and assignments within the local vicinity of their homes, without the withholding of taxes from those “per diem allowances” paid to health care professionals and without the payment of payroll taxes by the nurse staffing company, violates of Federal Statutes, more particularly, 26 USC §162(a)(2), the regulations of the Internal Revenue Service, more particularly 26 CFR 1.274-5, Revenue Procedure 2001-47, 2001-42, I.R.B. 332, and Revenue Ruling 69-592. See also, United States v. Cornell, (1967) 389 US 299, It also violates provisions of California State Law requiring the withholding of taxes and payment of payroll taxes, more particularly, California Revenue & Taxation Code §§18662, 18663, 19708, 19709, and 19713; and California Unemployment Insurance Code §§ 976, 986, 987, 13020, 13021, and 13071.
Applied to the payment of “per-diem allowances” to health care professionals, when those professionals are not away from their homes but instead commute between their homes and assignments within the local vicinity of their homes, it is unfair competition within the meaning of California Business & Professions Code §17200 because the failure to withhold taxes, failure to pay employment taxes from those allowances caused the nurse staffing company to gain, and to continue to gain, an economic advantage over other employers in the same business who paid per-diem allowances only to health care professionals away from home and paid payroll taxes on the entire earnings of its health care professionals who performed assignments commuting between their homes and assignments in the local vicinity of their homes.
The payment of “per-diem allowances” to health care professionals when those professionals were not away from their homes but instead were commuting between their homes and their assignments within the local vicinity of their homes constitutes an unfair competition within the meaning of California Business & Professions Code §17200 because it deprives the nurses of social security benefits, unemployment benefits, disability benefits, and other incidents of employment based on taxable wages paid.
If you have any further questions please contact David Justin Lynch at 760-325-6900
