Yesterday, Sunday, November 6, 2022, at 2:00 a.m., the daylight savings ended in most states. The clocks were set back one hour, causing confusion and challenges for employers with nonexempt employees who were working during the time the clocks fell back. How do we pay employees during this time? What is our legal obligation related to hours worked and paid?
Below are three wage and hour answers, for daylight savings time change(s):
- Pay and Hours Worked: Employers are required to pay employees for all hours worked. Nonexempt employees working last night at 2:00 a.m., must be paid one additional hour of pay, “unless the start/end times of their shifts are adjusted in anticipation of the time change. In essence, such an employee will have worked the hour from 1:00 a.m. to 2:00 a.m. twice.”[i]
- Overtime: The one additional hour must be considered into the overtime compensation/calculation for the entire week. If the nonexempt employee is scheduled for 40-hours this week, the additional hour would put the employee at 41-hours, one hour of overtime, at least time and one-half the normal hourly rate.
- Overtime Rate: “In addition, employers must take this additional hour of work into account when computing the employee’s regular rate of pay for purposes of calculating the employee’s overtime rate.”[ii]
Additionally, ensure that your payroll systems fell back during the time change on Sunday. I have seen issues with timekeeping and payroll systems not resetting for the one-hour time change, which will cause additional issues when processing payroll.
“1. Does Double Pay Apply for 1:00 a.m. to 2:00 a.m.?
Employers whose nonexempt employees are in the midst of a shift at 2:00 a.m. on November 4, when that time becomes 1:00 a.m., may be required to pay these employees for one additional hour of work—if, in fact, the time change extends the number of hours actually worked. This is because federal law requires employers to pay employees for all hours worked, and these employees will have essentially worked the hour from 1:00 a.m. to 2:00 a.m. twice (and that “extra” hour will carry over throughout the remainder of the shift). To avoid this, employers could alter the start or end times of these nonexempt employees’ shifts on November 4.
2. Employers’ Overtime Obligations
If an employer in the above scenario does pay its nonexempt employees for an additional hour of work, it might be on the hook for overtime compensation as well. That is, the hour from 1:00 a.m. to 2:00 a.m. that equals two hours of work might result in a workweek of over 40 hours or a workday in excess of 8 hours. Employers may need to consider that additional hour of work in determining employees’ overtime compensation for the day and week.
3. Regular Rate of Pay
The Fair Labor Standards Act (FLSA) requires employers to pay employees one-and-one-half times their regular rate of pay for all overtime hours worked. For some employees—those paid on commission, tipped workers, and employees who receive bonuses, to name a few—this regular rate is a bit more difficult to determine. Under federal law, an employee’s regular rate of pay is the employee’s hourly rate for all of his or her non overtime hours worked in a single workweek. When calculating an employee’s regular rate, employers must consider all compensation that the employee received in one workweek, including the additional hour of compensation to which a nonexempt employee may be entitled if he or she is working during the time change. Thus, employers that have workers on the clock at 2:00 a.m. might need to take this into account when computing employees’ regular rate of pay for the week for purposes of calculating an employees’ overtime rate.
4. What About the Beginning of Daylight Saving Time?
Forward-thinking employers may also want to take the start of daylight saving time into account. Nonexempt employees who are working on Sunday, March 12, 2023, at 2:00 a.m.—when clocks will “spring forward” to 3:00 a.m.—may be entitled to one fewer hour of pay for their shifts because, essentially, they would not have worked from 2:00 a.m. to 3:00 a.m. For example, if an employee is scheduled to work a shift from 11:00 p.m. to 7:30 a.m., he or she will have worked only seven hours. Once again, employers may adjust their nonexempt employees’ schedules for that day to give them an additional hour of work.
Note, however, that the FLSA does not require employers that decide to pay a worker for a full eight-hour shift even if he or she worked only seven hours to include that extra hour of pay in calculating the employee’s regular rate of pay for overtime purposes. The FLSA also prohibits employers from crediting that extra “nonworked” hour of pay toward any overtime compensation due to the employee.
As in every situation, employers will want to take into account any additional obligations under a collective bargaining agreement or state law.
States That Deviate From the Daylight Saving Standard
Note that Arizona (with the exception of the Navajo Nation) and Hawaii do not observe daylight saving time. Not to be outdone, Florida and Nevada have passed bills that would ensure that daylight saving time is observed year-round. Though their respective state legislatures approved these bills and their governors signed them, they are still awaiting federal approval. And, of course, there’s California, which just a few days after the end of daylight saving time will vote on a proposition to move the state to year-round daylight saving time as well. Even if that proposition passes, it will require congressional approval for the change to become permanent.” (JDSUPRA)
[i] https://www.shrm.org/resourcesandtools/hr-topics/compensation/pages/daylight-saving-time-wage-hour-problems.aspx
[ii] https://www.shrm.org/resourcesandtools/hr-topics/compensation/pages/daylight-saving-time-wage-hour-problems.aspx
[iii] https://www.shrm.org/resourcesandtools/hr-topics/compensation/pages/daylight-saving-time-wage-hour-problems.aspx
BURR CONSULTING, LLC 