It depends whether it is done as an "accountable plan", or whether pay is "grossed up" to allow for travel expenses.
Accountable plan monies are not taxable to the employee, monies included in gross pay to cover expenses, where the employee does not have to submit timely claims, are taxable to the employee.
No, there is no law requiring employers to offer per diem as a fringe benefit.
Monies paid to employees are expenses to the employer, not income, so they wouldn't be taxable to the employer as income, and may or may not be taxable to the employee, as above.
Snipes