What is a Per Diem?

A Per Diem (Latin for “per day”) is a fixed daily reimbursement that a business gives to its employees who are traveling longer than a day for business purposes. Per Diem payments can be given for both lodging and meals & incidental expenses (M&IE) or only M&IE, depending on the situation and where the employee is traveling. For example, the company may have a dedicated condo for employee travel in a specific city and thus would not need to reimburse its employees for lodging there. M&IE includes any expense associated with traveling away from home that doesn’t fall into the lodging category. M&IE examples are meals, room service, luggage handlers, dry cleaning, and tips.