What does per diem mean in the workplace? The per diem employee definition is an employee that is hired or used on an as needed or daily basis. Usually, per diem employees work less than full-time hours and are not eligible for traditional employee benefits. We will answer some common questions about per diem work including:
- What is per diem work?
- What is a per diem employee?
- Advantages and disadvantages of per diem work
The Most Common Per-Diem Jobs
What is a per diem job? Usually, per diem positions are those that an individual with appropriate training or licensure can step right into to fill a short-term need. There are some jobs that make sense to employ per diem workers. We highlight some of the most popular industries who use this type of labor.
Perhaps the most obvious example of a per diem employee is a substitute teacher. Whenever a full-time teacher is ill, the applicable district calls a qualified substitute to come in and cover the absent teacher’s classes. Rates of pay for substitute teachers nationwide are about $108 daily. Given a 180-day school year, that comes out to a bit more than $19,000 annually. Subs never work every day, however.
Some healthcare workers, particular those working in hospitals, are also per diem employees. Common per diem job roles include:
- lab technicians
- personal support workers
- other non-medical professions
Typically, highly skilled workers will receive a higher hourly rate because they don’t receive benefit packages. Also, hospitals often need replacement staff at a moment’s notice and are grateful to these per diem workers who bail them out when they need it. It’s interesting to note that the healthcare industry treats its per diem workers far better than the education system does.
Construction work is another industry that attracts many per diem workers. Companies can hire a large number of workers when they’re under a time crunch and then let them go once the job is done. In the past, construction companies also used a per diem rate structure to skirt their overtime obligations. Now, however, after a crackdown by the government, construction companies pay overtime and even use that fact to lure skilled workers away from more fly-by-night operations.
Related Resource: 20 Companies With the Best Benefits
How is a Per Diem Worker Different than an Independent Contractor?
While both per diem workers and independent contractors work on an “as needed” basis, they are very different.
Per diem workers are actual employees of a business or organization. They receive a W-2 and have taxes automatically withheld. Employers pay taxes for per diem workers. Per diem employees are subject to minimum wage requirements and overtime pay benefits.
Independent contractors are not employees and do not have the same benefits and protections as per diem employees.
Obviously, daily workers can choose their own hours. Per diem employees choose the days and hours that work best for their lifestyle. They can hold down multiple positions at once and get training in different areas of their chosen field in a quest to bolster their resumes. The flexibility also allows them to focus on quality of life. If a worker is looking to get a “foot in the door,” then per diem work is far superior to unpaid internships or volunteering because the person actually gets paid.
There are advantages for business owners as well. They only pay for the work they need and are not obligated to provide consistent work. Need some furniture moved? Hire a per diem worker to complete the project! Unexpected teacher shortage at school? Hire a substitute! Per diem employees can help employers keep business moving without interruptions.
Chiefly, the employer can say, “Thanks, that’s all we need,” at any time, leaving you with no recourse except to find another daily job. Although you usually make more money, with the exception of substitute teaching, than full-time employees, you have to pay out-of-pocket for healthcare, should you need it, because you very likely don’t have benefits like health insurance.
Even if the company for which you are providing your services does not terminate you, you might not get as many hours as a full time employee because of competition between workers. Such competition might lead to strife between workers amid cries of favoritism or worse. A poor work environment can lead to stress and its related conditions.
Other Uses for Per Diem in the Workplace
Traditional employees can be subject to per diem pay in certain circumstances. Per diem can also refer to a daily stipend paid to employees who travel for work. Businesses set a per diem rate paid to employees to help cover the cost of expenses related to travel including:
- incidental expenses
By paying employees a lump sum per day, they can prioritize their spending. Employers create a per diem employee policy which specifies reimbursable expenses and provides clarity about essential and non-essential business travel. The General Services Administration provides a general per diem rate for business travel to most US locations. For 2022, the maximum amount is $155/day. For accommodations only, the rate drops to $96/day. For meals and incidental expenses, the per diem rate is $59. Employees can submit an expense report to be approved by their employer. Approved per diem reimbursements that follow the IRS guidelines are not taxed.
If per-diem work is a good fit for you, be sure to vet your prospective employers thoroughly. Check out their history with per diem employees. If possible, talk to a few of them to get an idea of how things go. Research the industry to see if what pay you’re being offered is both commensurate with your experience and in line with or better than the industry standard. If you look out for yourself, then there’s no reason a per diem job won’t be great for you.