What Does Per Diem Mean? (Definition, Term and Meaning)

Per diem is a Latin phrase that means “per day or each day.”

It typically.” 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 required to travel for work.

Additionally, it provides income to individuals who work solely per day.

Per diem may be calculated by employment status, state/government regulations, distance, and travel costs.

How per diem pay works varies based on the job and the responsibilities of the individual.

To illustrate, here are several examples of how people earn per diem pay.

Example 1: Healthcare Workers

Some nurses work per diem (per day) to earn additional income.

It allows nurses to set their schedules and pick up additional shifts whenever they need extra money.

If the nurse is a contractor and does not work for an employer, they may work solely on a per diem basis.

It means they work on a contract and are not employees of a particular hospital/institution.

Additionally, these nurses can work on a travel contract.

Some travel expenses will be covered/reimbursed by the employer to compensate for time away from home.

It provides incredible opportunities for nurses to travel and experience new locations.

Example 2: Retail Businesses

An employee, supervisor, or manager may be required to travel for work in a corporate business.

In this case, the employee will earn per diem pay and their regular salary to cover various expenses.

It includes food, gas, hotels, and other travel expenses.

Therefore, the per diem pay awarded to the employee helps offset daily costs while they travel.

Additionally, businesses may use a business credit card to cover travel expenses.

These expenses are tax-deductible for the company and earn them additional money/incentives from the credit card company.

Example 3: Flight Nurses and Travel Industry

Flight attendants may receive a per diem rate each day they spend away from home/outside the country.

Moreover, per diem rates may increase the further the travel.

The per diem they earn accumulates even when they are not performing their flight attendant duties.

Their per diem pay satisfies travel expenses that include food and other basics.

If the flight attendant is away for an extended period, they’ll receive a higher per diem rate.

It helps compensate for the extended time away from home and the financial toll taken on by the flight attendant.

However, this is also true of pilots and other travel industry employees.

Depending on the company, an individual will receive higher per diem rates if work extends beyond a specified period.

Per Diem vs. Hourly vs. Salary Pay

While jobs pay individuals per diem while traveling, it should not be confused with hourly or salary pay.

As mentioned earlier, corporate employees and flight attendants earn a daily allowance and regular wages when work requires travel.

However, some careers pay per diem strictly for contractual work.

For example, nurses who don’t want a regular job with a specific employer can work exclusively per diem.

It provides flexibility for setting their schedule to work whenever they want.

As a result, they can decline work shift offers they don’t want and choose only the ones they desire.

Furthermore, they can work several days a week, once a week, or every other week.

The downside is that some employers don’t offer healthcare benefits, and work hours aren’t guaranteed.

Moreover, they won’t receive the advantages that full-time employees get.

Per diem pay occurs solely when an individual provides work services.

As a result, there is a lot of freedom in terms of time and income.

However, there are no guaranteed hours, which financially impacts areas that don’t frequently require per diem nursing.

Per Diem Pay is Based On:

  • Contractual work (working on a contract but not as an employee)
  • On-call work (employees such as flight attendants are required to be on-call)
  • Distance and travel expenses (employees working for a company with a set schedule but needing to travel for work)

It’s vital to point out that these factors vary between companies/organizations.

As a result, not all locations employ the same rules for per diem pay.

For example, flight nurses on call must be ready to work at a moment’s notice.

Conversely, per diem nurses choose their shifts based on the company’s demands.

How Per Diem Pay Works

Regarding work travel, per diem pay may cover all or only part of the expenses incurred.

For example, employees traveling for a meeting will have the airline and hotel room paid for by their employer.

They also receive daily pay for meals and other essential travel expenses.

The employer can directly cover the expenses with a credit card or reimburse the employee afterward.

In the case of reimbursement, it’s essential employees save their gas, tolls, and lodging expenses for payment.

An employee will receive a business card to cover any daily expenses in some situations.

However, the company can have costs such as the hotel room, vehicle, and internet paid in advance.

It allows the employee not to spend their money or place it on a business card.

Instead, they arrive at their location, show their credentials, and arrange everything else.

Individuals reimbursed for travel expenses must keep their receipts and understand their daily allowance.

For example, if the company covers $200 per night for lodging and food but spends $250 per night, the employee is responsible for the additional $50.

As a result, they will be personally responsible for the other $50.

Each company operates differently regarding how they handle costs.

Therefore, it is necessary to understand your reimbursement expenses to make better decisions regarding your money.

Careers That Offer Per Diem pay

Many careers, from flight attendants to travel nursing, offer Per Diem work.

The money earned depends upon employment status, contractual agreements, government/state regulations, and distance/travel expenses.

While this is an incomplete list, here are a few careers that offer Per Diem work.

Careers That Offer Per Diem Pay

  • Travel industry
  • Healthcare
  • Government jobs
  • Contractual work
  • Retail/commercial jobs that require travel

Although these are the most common jobs that pay per diem, any job that requires travel can offer per diem pay.

It allows employees to compensate for travel expenses.

Pros and Cons of Per Diem Work

Per Diem work has pros and cons that depend on the employee’s/employers goals and desires.

As mentioned earlier, nurses or contractors can work solely per diem.

It allows them to set schedules and improve their work/life balance.

As a result, they can focus on hobbies, take care of their children or earn extra money when needed.

For flight attendants, retail/commercial workers, and other employees, per diem pay provides a set daily allowance.

It covers their travel expenses while away from home and their salary to cover their living expenses.

Flight attendants sometimes take home extra money if travel expenses exceed their daily allowance.

Another excellent thing about per diem work is that some jobs allow individuals to visit new locations.

It’s great for those who want different challenges rather than working in the exact location daily.

In addition, per diem work will enable them to earn additional income for full-time employees outside their regular 9-5 job.

Pros of Per Diem Work:

  • More flexibility with work schedule
  • Traveling to new locations
  • More diversity in terms of work and responsibilities
  • Ability to potentially earn additional money

With that said, this work isn’t for everyone.

Here are some downsides to per diem employment.

Individuals who work exclusively on a per diem (contractual) basis may not receive medical benefits, sick pay, or vacation time.

It’s because they are not a full-time employee.

As a result, they may not receive employee benefits.

Some employers have deals with healthcare insurance companies to provide discounts to contract workers.

However, this varies on a company-by-company basis.

Also, some jobs may not offer regular hours.

Consequently, the work available can go up or down significantly based on the company’s needs.

If the work requires frequent travel, some individuals can find themselves homesick.

As a result, this work negatively impacts homesick people by being away from family and friends.

Lastly, per diem pay covers only part of an individual’s expenses, and some people have to foot the bill and wait for reimbursement.

Unfortunately, it can be frustrating having to collect receipts and wait for reimbursement or spend money on non-reimbursable expenses.

Cons of Per Diem Work:

  • Per Diem work may not offer stable pay
  • It May require lots of time away from home
  • Workers may not receive medical benefits, sick days, or vacation time
  • You may need to manage expenses more wisely

As you can see, per diem pay offers a lot for those who enjoy flexibility, travel, and diversity.

It also allows employees to earn extra money beyond their regular salary.

However, for those who rely exclusively on per diem pay, it’s not always a reliable source of income.

It’s especially true in industries that don’t need many per diem workers.

If money is tight and the lack of benefits, sick pay, and vacation time are discouraging, this work may not be for you.