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UNallowable Travel Cost


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Say I organize and hold a relatively large meeting on a project. Attendees are direct employees, both local and remote, and local hourly contractors. After the meeting the whole group at my invitation goes out to dinner and I pick up the tab. Is the cost of this meal allowable under the cost principles? The cost is well under the per diem and I have excluded alcohol and so on.

I can identify individual meals to the individual on the receipt. I am not sure whether I should exclude 1) the local employees not on travel, 2) the local hourly contractors – not normally reimbursed for meals. There will be no duplication of costs with any individual travel expense report.

Currently I have made the costs for the local employees not on travel, and the local hourly contractors unallowable.

Does this meeting fall under Travel Costs, Entertainment Costs, or something else?

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Whynot,

The allowability of the dinner hinges on its purpose. What was the purpose of the dinner?

Assuming it was just for "relationship building" and for no other business purpose, the employees on travel are entitled to their individual M&IE amounts. Period.

If it was for a more "business-like" purpose, and you have an agenda, then you can also claim the individual meal cost of the local employees who attended.

Whether you can claim the individual meal costs of the local hourly contractors depends on several factors, including what your policy says. I will offer the observation that, if you claim the individual meal costs of the local hourly contractors because there was a bona fide business purpose to the dinner ... then you also better pay them their hourly wages for attendance. Otherwise, you're setting yourself up for a FLSA finding.

Hope this helps.

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Retreadfed,

There's quite a bit we don't know. I was assuming the hourly contractors would be either 1099 folks or they would be subcontractors. If they were subcontractors, then of course the company that paid them would be on the hook, but then I assume the subcontractor would bill the prime for the additional cost.

You're focusing on "contractors" and perhaps that does let the company off the hook, but I was focusing on "hourly" and my intent was to point out some potential pitfalls in the idea that there's going to be some kind of partnering dinner that going to be allowable.

As I said, there's a lot we don't know. And a lot of assumptions. It's hard to have good answers without facts. That being said, I suppose you're right about the FLSA issue.

H2H

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