What is Per Diem Work?

In the modern workforce, flexibility is becoming increasingly important. As businesses grow and adapt, they often look for employees who can fill roles on an as-needed basis. This is where per diem work steps into the spotlight. If you’ve come across the term “per diem” while searching for job opportunities or reading about different employment arrangements, you might be wondering what exactly it entails and whether it is right for you.

Join us as we demystify per diem work, explaining it in everyday language and walking you through its various aspects—from pay rates to tax considerations, from job flexibility to potential downsides like limited job security.

What is Per Diem Work?

At its core, per diem work refers to a type of employment arrangement in which an individual is hired and paid on a daily (or sometimes hourly) basis, rather than drawing a regular salary or a guaranteed minimum number of hours. The phrase “per diem” is Latin for “per day,” implying payment is based on daily work or daily allowances, rather than a monthly or yearly salary. Employers use this model for short-term, ‘as-needed’ staffing. This might be to fill immediate vacancies, cover unexpected surges in workload, or provide a substitute for regular staff who are out sick or on vacation.

In contrast to full time employees who work fixed hours and receive a consistent paycheck, diem employees do not necessarily have a set schedule. Companies will call them in when the need arises. For instance, hospitals use per diem employees—nurses, technicians, or administrative staff—to fill gaps in staffing schedules. Schools often rely on substitute teachers who also work on a “per diem” basis, stepping in to manage a classroom if a full-time teacher is absent. This makes per diem work an attractive option for individuals seeking a high degree of flexibility - however, it does come with some distinct trade-offs.

Defining Key Terms Relating To Per Diem Employees

The terms “diem employees,” “per diem employees,” and “diem workers” tend to be used somewhat interchangeably. In everyday conversation, an employer might say “We have some diem employees on call,” or “We’re adding more per diem employees to our roster.” Both statements convey that the organization hires workers who can be scheduled for shifts, tasks, or duties only when the company deems it necessary. These individuals are not guaranteed a specific number of hours. Moreover, they typically do not receive certain benefits such as paid time off, retirement plans, or consistent health insurance coverage that regular full time employees might enjoy.

However, depending on where you work, you might encounter slight differences in the usage of these terms. Some workplaces distinguish “diem workers” as independent contractors who invoice for days worked, while “per diem employees” are direct hires who go on the organization’s payroll but without fixed hours. Regardless of the nuances, the overarching concept remains the same: short-term staffing on a daily or shift-specific basis.

What Is A Per Diem Allowance?

You may have also heard people use the words “per diem allowance” or “diem allowance.” In certain contexts—especially for federal employees or employees in roles that involve traveling—a “per diem allowance” refers to an allotment of money for business travel expenses. Instead of having to track every single meal, lodging cost, and cab ride, the employee might receive a flat rate to cover these costs each day. This arrangement simplifies the paperwork; the worker typically only needs to justify costs if they exceed that standard daily allowance or if certain extra expenditures arise.

Within the U.S. government structure, the general services administration (GSA) sets diem rates for federal employees traveling to different cities. For example, if you’re a diem employee traveling from your home base in one state to a conference in another, you might be allotted a specific diem rate for meals, incidental costs, and lodging in the destination city. This arrangement prevents confusion over itemized receipts and ensures consistent reimbursement guidelines across government agencies.

The Role of the General Services Administration (US only)

In the US, if you work in the public sector or deal with government contracts, you’ll likely come across the general services administration (GSA). This agency is primarily responsible for supporting the basic functioning of U.S. federal agencies. One of the GSA’s roles involves establishing diem rates for federal employees who travel for business. The GSA publishes annual rates for lodging and meals, which vary by location. These official diem rates act as a guideline for travel reimbursements, ensuring fairness and consistency across government institutions.

Private employers often adopt or reference these rates for their own business travel expenses, though they are not strictly required to do so. For instance, a large consulting firm might align its internal diem allowance or diem pay guidelines with the GSA’s numbers, especially for assignments in high-cost metropolitan areas.

Travel and Business Expenses: How Per Diem Relates

One of the primary reasons per diem work became common in certain fields is the need for traveling professionals. In addition, many employees—from federal employees to corporate consultants—incur business travel expenses. These expenses might include airfare, car rentals, lodging, meals, and various incidental expenses (such as tips or small daily costs). Rather than reimburse every cup of coffee or parking ticket, employers will often give traveling staff a daily “per diem” that is intended to cover those travel expenses.

Actual Expenses vs. Per Diem Rates

When a company reimburses “actual expenses,” it means employees must track and submit receipts for each dollar spent. Conversely, when a company or agency uses a per diem allowance, the worker is given a flat amount to cover daily costs—no need to submit individual meal receipts, for instance, unless they exceed the daily maximum. This simplified system reduces administrative overhead and can be more convenient for both employee and employer.

Common Industries That Rely on Per Diem Work

1. Healthcare: Hospitals and clinics commonly employ per diem employees such as nurses, radiology technicians, physical therapists, and administrative professionals. These individuals help fill staffing gaps, especially when regular employees are on leave or when patient volume spikes.
2. Education: Substitute teachers are often the classic example of per diem workers in the education sector. They step in for absent faculty, sometimes for a single day, other times for several weeks. The arrangement provides schools with flexibility while giving substitutes the freedom to work on sporadic schedules.
3. Hospitality and Events: Large conferences, hotels, and event venues often have seasonal or event-based workforce needs. Diem employees might be hired to handle check-ins, registration desks, or assist with catering during large gatherings.
4. Government and Federal Agencies: As mentioned, federal employees traveling for official duties often receive a per diem allowance to cover their daily costs. Some government-related positions also operate on a day-by-day staffing model for specialized tasks, although less commonly than in the private sector.

Pros of Per Diem Work

1. Flexibility: One of the most significant benefits for diem employees is the ability to choose shifts that fit their schedule. This model suits individuals with personal or family commitments, or those exploring different career paths.
2. Potential for Higher Pay: Because they are not guaranteed hours, many diem workers are compensated at a higher rate than their full time counterparts. This premium exists to offset the lack of benefits such as health insurance or paid leave, as well as the uncertainty in scheduling.
3. Variety of Environments: Per diem roles can expose you to multiple workplaces, especially if you sign up with a staffing agency or manage schedules across different organizations. This can be appealing to those who thrive on variety and new challenges.
4. Opportunities for Overtime Pay: While it varies by employer, certain per diem arrangements still allow for overtime pay if you exceed a specific number of hours in a day or week. This can boost income for those who are willing and able to work extra shifts.

Cons of Per Diem Work

1. Lack of Predictable Income: Because the employer is not obligated to guarantee shifts, diem employees can face inconsistent pay. If budgets tighten or there’s a low period, you may receive fewer calls, leading to an unpredictable income stream.
2. Limited or No Benefits: While same worker benefits sometimes exist at certain organizations, per diem roles typically do not include comprehensive benefits packages—like employer-sponsored health insurance, retirement plans, or paid sick leave. This can make it more challenging to plan for long-term financial and healthcare needs.
3. Fewer Protections: Per diem staff may find it more difficult to qualify for certain job protections that apply to regular full time employees. In the absence of robust employment contracts, job security can be limited, as you can be replaced or left off the schedule at any time.
4. Administrative Hassles: For those traveling on a per diem basis, you might still need to prepare an expense report if you exceed standard diem rates or if the employer uses a partial reimbursement policy. Managing receipts and lodging details can become an extra chore.

The Question of “Same Worker Benefits”

“Same worker benefits” is a phrase sometimes raised in discussions about fairness: should a diem employee who performs the same tasks as a full-time counterpart receive the same health, retirement, and paid time off benefits? Legally, many companies are not obligated to extend identical benefits to per diem staff, because these staffers are typically considered part-time or irregular employees. However, some progressive organizations strive to offer partial or prorated benefits to remain competitive in tight labor markets and boost employee loyalty.

Minimum Wage and Overtime

Even when you work “per diem,” federal and state laws regarding the minimum wage and overtime pay still apply, unless you are classified under an exempt professional category. For instance, if you are a per diem nurse, your hourly wage cannot legally drop below the state or federal minimum wage, and if your weekly hours cross the overtime threshold, you may still be entitled to an elevated pay rate. Always check your local regulations to understand the specifics.

Hot to Manage Tax Implications

1. Expense Tracking: If you receive a diem allowance for business travel expenses, ensure you understand what portion is tax deductible and what might become taxable income if you fail to follow Internal Revenue Service (IRS) guidelines (in the United States) or equivalent bodies elsewhere.
2. Consult a Professional: Because tax regulations can be complex—particularly for those who receive mixed compensation (some wages, some diem payments, some reimbursed actual expenses, etc.)—it often pays to consult with a tax advisor or accountant. This is especially relevant if you move between multiple per diem jobs or frequently travel out of state.
3. Maintain Records: Even if your employer grants a set daily diem rate, it is wise to hold onto key receipts for at least the duration of the tax year, in case of auditing or if you need to itemize certain deductions. Digital record-keeping apps can make this easier.

Real-World Example: Substitute Teacher

Let’s consider substitute teachers as a classic model of diem workers in the education system. Typically, a substitute teacher is paid a flat diem rate by the school district. Some districts might pay $100 per day, others might pay more, especially if the person holds advanced certifications. In return, the substitute teacher arrives on short notice, covers a variety of subjects, and may only work a handful of days each month.

Often, schools and districts will have their own policies for reimbursements. If a substitute teacher must travel between multiple school sites, they might receive a per diem allowance or mileage reimbursement. In some cases, the teacher might also submit an expense report for classroom materials they had to purchase. Whether these costs are tax deductible or count as taxable income depends on how the district structures its reimbursements and the relevant state or federal guidelines.

Transitioning from Per Diem to Full-Time

Some people use per diem work as a stepping stone. After all, if an employer recognizes your reliability and effectiveness, they might offer you a permanent role. Nurses, for instance, sometimes begin as diem employees in hospitals to get a feel for the work environment, the team dynamics, and the patient load. If they find a unit that suits them, they might transition to a full-time position. The same is often true for substitute teachers, who discover they love teaching a particular grade or subject and decide to pursue a full-time teaching certificate or contract.

Whether or not you make this leap depends on your personal circumstances—financial stability, desire for health insurance, retirement options, and your preference for a predictable schedule versus the flexibility that a “per diem” approach provides.

Per diem work offers a unique blend of flexibility and opportunity, catering to those who prefer or need to work on an ‘as-needed’ basis. The per diem employment model can be especially helpful for organizations that experience fluctuating demands, like healthcare facilities that adjust staffing based on patient census, or school districts that must constantly replace absent teachers. From the worker’s perspective, diem employees can enjoy autonomy in scheduling, potentially higher daily pay, and exposure to different work environments. However, they also face drawbacks such as uncertain job security, a lack of employer-sponsored health insurance, and no guarantee of hours.

Whether you’re thinking of becoming a diem employee or considering hiring more diem workers for your organization, it’s essential to understand the finer details—how diem payments are structured, what diem expenses or business expenses might be involved, and how a per diem allowance interacts with actual expenses and taxable income. Knowing the guidelines set by the general services administration can be particularly beneficial for those in or around government roles, helping to clarify diem rates for federal employees and providing a benchmark for private employers as well.