Monday, September 8, 2014

Falling Back (or Springing Ahead): The Correct Method to Pay Employees

I was sitting by a campfire last night and, although it was a beautiful night, I could not help but notice that there are signs of fall everywhere. The leaves are beginning to change, the evening air had a slight nip, and darkness arrived much earlier in the evening. These reminders of fall mean that, because of Minnesota’s participation in Daylight Savings Time, we need to think about the semi-annual ritual of the changing of the clocks. Each spring we “Spring Ahead” by moving the clocks forward one hour at 2:00 a.m. on a designated date. Each fall, when Daylight Savings Time ends, we “Fall Backward” by changing the clocks back one hour. This year Daylight Savings Time will end on November 2, 2014.

This semi-annual ritual of changing the clocks is often a concern for those employers who have non-exempt (hourly) employees working the late shift (at 2:00 a.m. when the clocks change). When the clocks are moved back those employees usually work an additional hour for the shift. When the clocks are moved ahead those employees usually work one less hour for the shift. 

Under the Fair Labor Standards Act (“FLSA”) employers must pay employees for all hours worked and overtime for any hours worked in excess of 40 hours per week. So how do these basic rules apply during the changes related to Daylight Savings Time? Here is a summary:

Fall Backward:  Employees usually work one more hour per shift. Employers must pay the employee for the total number of hours actually worked. So, if the shift is normally eight hours, the employee must be paid for nine hours. The extra hour of pay must also be included in the employee’s regular rate of pay for calculating overtime.

Spring Forward:  Employees usually work one less hour per shift. Employers may choose to pay the employee for the normal number of hours worked for the shift; however, employers are not required to pay employees for the hour that was not worked. If the employer does choose to pay the employee for this hour, the employer does not have to include the extra hour in the employee’s regular rate of pay for calculating overtime. The employer may not, however, use the extra hour of pay as a credit to overtime compensation that is owed the employee.

As you enjoy these final waning days of summer you may want to add a review of your pay policies during the changes in Daylight Savings Time to your fall to-do list.

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