Compliance officers can pick fights with employees over any number of workplace policies. But if you really want daggers drawn, venom, and subversive battles at every turn—impose a policy on business travel.

Most corporate road warriors can book airfare, hotel, and rental cars simply by clicking onto one of the many travel websites blanketing the Internet. That makes persuading them to use the corporate-sanctioned process all the more difficult, if nearly impossible. “I can get a flight/hotel/ car cheaper on my own and with less hassle,” is a common response.

Obviously compliance with company travel policy has its value. To start, it helps to manage costs, says Ramon Tavares, co-founder of Blackspark Corp., a vendor of corporate travel software. Although employees can occasionally find better deals on their own, a comprehensive program lets organizations negotiate rates that typically beat most one-off deals. And reasonable policies, like requirements to book flights at least two weeks in advance when possible, also help keep travel expenses in line.

Getting employees to follow travel policies also cuts the risk of abuse and fraud. Questionable expenses are harder to uncover when travelers go around the system, as many aren’t automatically flagged.

When employees go outside the system and then run into problems—say, medical emergencies or natural disasters—a company might struggle to respond quickly, if it doesn’t have fast access to trip details. Circumventing procedures also hampers a company’s efforts to ensure it is covering any tax obligations incurred by traveling employees.

Several techniques can foster compliance. One is communicating with employees in engaging ways, such as short videos and e-learning modules, says Yon Abad, senior director with Carlson Wagonlit Travel’s CWT Solutions Group. Written policy documents still are available to provide detail.

Some companies use online travel solutions that automatically steer employees to suppliers with which the company has contracted, and to options that fall within their policies, Abad says. On a practical level, that limits an employee’s ability to flout the rules.

Other solutions show all options, but place those that meet the organizations’ policies first, says Doug Anderson, vice president at Concur, another software vendor that helps to manage travel expenses. If the options that meet the guidelines aren’t practical—say, no flights on the preferred carrier allow enough time for a worker to make an important meeting—the travel department knows why the employee booked a non-compliant flight. “Sometimes, employees book outside the policies, and the business needs to know why,” he says.

To curtail the potential for fraud, the system should flag transactions that appear suspicious, Tavares says. One example: duplicate receipts submitted for the same trip. Some companies also impose more reviews on expenses if an employee pays for expenses with personal credit cards or cash, Abad says. 

Winning the Policy War

So let’s get back to the venom, subversion, and employees hating new policy. A sticks-only approach, with no carrots to encourage compliance, will do a chief compliance officer no favors.

“While everyone wants to look like a hero for saving costs, you have to understand the culture and engage with stakeholders.”
Anita Salvatore, EVP, Global Account Services, Travizon

Some companies encourage compliance by recognizing employees who are booking travel according to the rules, Tavares says. “They share success stories.” Others initiate competitions between departments to see which ones can boost compliance the most, Abad says. “Liberate their competitive mindset.”

Some organizations send automated text messages or e-mails to travelers, reminding them that, for example, the hotel rate already includes Internet access, so they shouldn’t pay extra for it, Abad says. These messages also can keep travelers abreast of flight delays and other information relevant to their trips. 

The communication can flow both ways. A growing number of organizations collect employee reviews on the travel services they’ve used, Abad says. “It gives voice to the traveler, and it helps ensure they have the tools they need to be productive on the road.”

Along with employees, the budget owners—that is, the department and business unit heads—need to be engaged, says Anita Salvatore, executive vice president at Travizon, a provider of travel management services and technology.  “Find out what makes them tick and how to help them achieve their goals,” while still maintaining a reasonable budget, she says.

That’s key. Draconian policies can reduce morale and hamper employees’ ability to do their jobs. “While everyone wants to look like a hero for saving costs, you have to understand the culture and engage with stakeholders,” Salvatore says. 

When employees try to circumvent the rules, the organization should know. Many systems require management approval if a proposed trip doesn’t meet the organization’s guidelines, Salvatore says. Of course, approval should be used with discretion. As she points out, companies that grant every exception request undermine their own policies.

Other Obligations

Employees aren’t the only ones with compliance responsibilities arising from their travel. Some countries, as well as some U.S. states, impose tax and reporting requirements on business activities that occur within their borders, even if the workers are just traveling through. “Different obligations accrue to the company, and you need a system to summarize travel data to bubble up any obligations,” Tavares says.


Below is an excerpt from Orson D. Munn III et al. v. The Hotchkiss School, detailing the travel complaints filed against the school.
On June 11, 2009, Orson and Christine Munn filed this lawsuit as next friend to their daughter, Cara, alleging that Hotchkiss’s negligence in the execution of its 2007 China Summer Program caused Munn’s injuries while Munn was a student in Hotchkiss’s care. Specifically, the Munns alleged that Hotchkiss was negligent in (1) failing to properly warn Munn and her parents of the risks of insect-borne diseases, specifically viral encephalitis; (2) failing to provide proper protective clothing, insect repellent, or vaccination by its employees and agents; (3) failing to provide appropriate medical personnel on the trip who could diagnose or arrange treatment for students on the trip; (4) failing to establish procedures for identifying medical emergencies, notifying parents of seriously ill children, and transporting seriously ill students to the United States for treatment; and (5) failing to advise the Munns of the availability of vaccines against viral encephalitis for children of Munn’s age traveling to rural areas of northeastern China in summer 2007 …
… At trial, the Munns abandoned the majority of these grounds for liability, proceeding with their arguments regarding Hotchkiss’s alleged failure to adequately warn of the risks of insect-borne disease on the China trip, and the alleged failure by its employees and agents to provide proper protection or prophylaxis (e.g., clothing, insect repellent, vaccination).
In addition to deny the allegations of negligence, Hotchkiss asserted several affirmative defenses, including that the Munns’ claims were barred by the doctrine of assumption of risk when the Munns signed the school’s pre-trip “Agreement, Waiver, and Release of Liability”; Munn’s injuries were the result of force majeure or caused by third parties; Munn’s injuries were caused by her parents’ contributory negligence; and finally, that with the exception of injuries caused solely by Hotchkiss’s negligence or willful misconduct, the Munns’ claims were barred by a signed release and waiver …
… After four years of discover, two settlement conferences, a dispositive motion hearing and numerous prêt-trial motions, the parties undertook a ten-day jury trial in which nine fact witnesses and ten expert witnesses testified. After  the Munns rested their case, Hotchkiss moved for a directed verdict (judgment as a matter of law) pursuant to Rule 50(a) of the Federal Rules of Civil Procedure, arguing that Munn contributed to her own injuries and the risk of contracting insect-borne disease while in Tianjin Province was unforeseeable as a matter of law … I denied that motion, nothing that the key bases for the motion focused on factual disputes that were within the province of the jury as the trier of fact, rather than questions of law …
… At the culmination of the trial, the jury found that the Munns met their evidentiary burden in showing (1) Hotchkiss was negligent in failing to warn Munn of the risk of insect-borne illnesses; (2) Hotchkiss was negligent in failing to ensure Munn used protective measures to prevent insect-borne infection; (3) Munn was infected by an insect-borne disease while visiting Mount Panshan; (4) one or more of Hotchkiss’s negligent acts or omissions was the cause in fact of Munn’s injuries; and (5) Hotchkiss’s negligent acts or omissions were a substantial factor that, acting alone or in conjunction with other factors, brought about Munn’s injuries … The jury further found that Munn had not contributed to her injuries, and it awarded Munn $450,000 in past economic damages, $9,800,000 in future economic damages, and $31,500,000 in non-economic damages …
… Hotchkiss then filed its renewed motion for judgment as a matter of law pursuant to Rule 50(b) (doc. 206), and in the alternative, for a new trial and to alter judgment pursuant to Rule 59 (docs. 207, 210). I heard argument on all three post-trial motions on July 11, 2013 (doc. 248).
Source: Orson D. Munn III et al. v. The Hotchkiss School.

This risk has become more pronounced over the past few years, says Kerry Weinger, a partner with law firm Baker & McKenzie. Partly that’s because advances in technology, as well as cost concerns, have prompted some companies to use traveling employees rather than expatriates to handle assignments outside their home countries. Often, “cross-border travelers fly under the radar,” Weinger says. Because this group of employees typically isn’t covered by employers’ global mobility programs, no single individual or department is watching for any tax obligations incurred.

At the same time, countries are enacting new laws or more aggressively enforcing existing ones to generate tax revenue from cross-border travelers. The proliferation of electronic identification systems at many border crossings also provides authorities with greater ability to identify which individuals and companies entering their countries might be incurring tax obligations, Weinger says.

Meeting these obligations requires communication, often across a range of departments: the traveling employees, their business managers, tax, compliance, immigration, payroll, and human resources, Weinger says. Employers also need to understand the tax requirements in the jurisdictions where employees travel, implement solid extended traveler policies, and designate an individual(s) to own these processes.

Given the complexities inherent in tracking all traveling employees, companies may want to limit their focus, at least initially. It may make sense to focus on those who rack up many frequent flyer miles, and especially those who travel on business visitor visas, rather than work permits.

Organizations also assume a “a moral, ethical, fiduciary, and legal duty to take care of employees when they cross borders,” says Robert Quigley, senior vice president of medical assistance with International SOS, a provider of medical and travel security assistance. Mishandling an emergency can lead to legal, financial, and reputational damage, he adds.

U.S. courts have held organizations responsible for the well being of individuals traveling with them or on their behalf. For instance, in Munn et al. v. Hotchkiss School, the plaintiffs sued on behalf of their daughter, a student traveling abroad when she was bitten by a tick. She suffered long-term physical and cognitive disabilities as a result of the bite. The suit alleged the school was careless in planning the trip and supervising the students while they were traveling. The court awarded the plaintiffs $41 million for medical costs and pain and suffering, although the decision has been appealed.

“This is one of the most under-managed risks for all businesses,” Anderson says. Organizations must develop protocols for communicating with, safeguarding, and assisting employees who run into danger while traveling.

In today’s world, almost all organizations employ workers who must travel to conduct business. That brings some level of risk. Mitigating it requires establishing and enforcing reasonable policies for booking travel services, establishing procedures for managing through emergencies, and paying attention to any tax or reporting obligations incurred because of the travel.