I would love to get feedback from someone who has even heard of an employer doing this. My husband accepted a job with a staffing agency for $15/hr. They pay him $8/hr st $12/hr ot and $7/hr per diem. He is not traveling. This ia a way for the staffing agency to make a huge profit off their customers, and then they can claim it as a business expense at the end of the year. Now, his paychecks are very nice. He works 20-30 ot hours a week which we all know Uncle Sam loves to eat up!! The way he is paid he actually makes less gross pay than if he were paid $15/hr taxable, but he nets A LOT!! At any rate, we are trying to buy a house, and at $8/hr (they won't accept non taxable wage) he doesn't qualify. Is this illegal on the employers part? Will he have to pay taxes on it because it was excessive? Ex: In one week on avg. he works 70 hours
40x8=320.00
30x12=360.00
70x7=490.00
So on a weekly basis he makes anywhere from 400.00-700.00 in per diem alone. Should I be concerned?

HMM!
Per diem includes other business expenses besides travel.. what does he do, what kind of work?
Is it an accountable or non-accountable plan, according to the employer? You really need to know.

In an non-accountable plan, which this sounds like, legit or not, a per diem amount is paid as part of income and you are not required to account for expenses. The per diem IS taxable (unlike in an accountable plan) and you try to offset that income by filing Form 2106 and entering it as an itemized deduction on the Miscellaneous Deductions portion of Schedule A.

Anyway, if I were you I'd be asking some serious questions while still trying not to get fire.

He's a maintenance technician in a warehouse. He has no expenses other than the gas it takes for him to drive to and from work! I've never been paid for that!!

Find out if non-accountable and answer back.
Maybe the staffing agency moves most people around a lot, and he's an exception. Just a guess. They don't usually survive long if they are really underhanded.
If non-accountable, he just has to file out a long form 1040 taxes and itemize deductions. Go to IRS.gov and print out last year's 2106 just to see what it will be like.