Per Diem Definition

The per diem definition is a Latin term that literally means "by the day". It typically, but not always, refers to situations in which an employee or an independent contractor gets paid a certain amount of money per day. In such a case, it is said that the employee gets paid per diem.

Substitute teaching is a perfect example of per diem pay because substitutes usually get paid the same amount regardless of free periods or the length of the school day. Day labor and other temp agencies often pay employees per diem, too. However, they usually pay an hourly rate that is paid daily. This still fits the definition of per diem. 

This is not the only definition of per diem, however. Per diem does not always refer to wages and fees. In a business environment, per diem can refer to daily expenses that an employee is allowed to incur. This case can apply to a journalist who travels to gather information for an upcoming article. The journalist may have a cap on how much he can spend per diem on supplies, lunch, lodging, coffee for the person being interviewed, etc. The employee typically fills out a form for each expense, which is often incurred with a company credit card. The forms are later sent to the company for approval. 

Employers usually grant per diem accounts when the employee must be at least 50 miles from home and stay somewhere overnight for the purpose of doing business for the company. 

Another definition of per diem is the accumulation of daily fees for a late payment. For example, if you fail to pay a bill on time, the accounts receivable department of the firm may charge an extra $5.00 per diem. Libraries are also known for collecting per diem late fees.