The first question often asked by new employees or project applicants is "what is my rate of pay?" In this economy, an ext than ever, your solution is vital to employees and also may be very closely scrutinized. For legal and practical reasons, employers have to obviously it is in accurate and careful in responding, especially where assorted differentials, specialty pay, on-call pay, clinical ladders, distinct pool rates, bonuses, and other bells and whistles might potentially offer rise come legal claims. Setting and tracking the continuous rate the pay because that non-exempt employees forms the foundation for creating lawful payroll practices.
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Even where employees show up to have a addressed base price of pay, their "regular rate" for objectives of compliance with the same Labor standards Act (FLSA) or any kind of applicable state laws might vary every week. Thus, this issue merits proceeding attention.
The an easy Rule
The constant rate of pay is the keystone for calculating employees' overtime rate. At its many basic, the constant rate is merely the hourly rate paid to an employee for the non-overtime workweek.<1> together a beginning point, if one employee's continuous rate of pay is $20/hour, the overtime price will be $30/hour. Although this an easy rule is simple, it quickly becomes complicated by variable add-ons and also work schedules.
Calculating The regular Rate
Employers are compelled to compensate employees one and also a fifty percent (1.5) times the constant rate of salary for all overtime work-related performed. The continuous rate of pay is presumed to include all remuneration paid to or on behalf of the employee, in everything form. When there space some exceptions, the employer bears the burden of developing that a kind of remuneration is excluded native the regular rate that pay.
As a result, job must include a wide range of compensation and benefits in the continuous rate of pay, consisting of pay differentials, incentive pay, and also many bonuses. Therefore, also if one employee's basic hourly price of salary is $20/hour, the "regular price of pay" for objectives of calculating overtime is boosted if the employee receives added compensation in the kind of transition premium or manufacturing bonus because that the workweek. Back not readily apparent, differentials and on-call salary alone can substantially increase employees' constant rate for purposes of the overtime calculation.
Failure to include all remuneration paid to an employee in the constant rate that pay decision would result in the underpayment of overtime and expose the hospital come liability. If such failures impact groups the employees, failure or errors deserve to prove costly indeed. For example, in June 2010, the department of job (DOL) announced the an employer payment 173 workers nearly $1 million in earlier wages based, in part, ~ above the DOL's finding that the employer violated the FLSA by no including change differentials in the calculate of the continuous rate that pay.
The 8/80 setup
The FLSA needs employers to salary the overtime price of pay for all occupational in overfill of 40 hours in a workweek. But hospitals have another option. They might elect to salary non-exempt employees the overtime price of salary for all hours worked in overfill of 80 hours in a designated 14-day job-related period. Under this option, however, lock must additionally pay the overtime rate to employees that work much more than eight hrs in any workday if that "daily" overtime quantity is better than the "over-80" lot in the specific 14-day period. Though not applicable to all employers, the 8/80 plan permits hospitals and particular other establishments to agree v their employee to calculate overtime in this manner. In part instances, the 8/80 plan may permit some greater versatility in scheduling.
Nevertheless, questions arise about application that the 8/80 arrangement to employers who usage 10 or 12-hour shifts. For many healthcare employers, such shifts room preferable and popular among both employees and supervisors. Yet employers that usage the 8/80 plan and also 12-hour shifts have to pay far-ranging amounts the overtime every pay period. For example, if an employee is reserved to work-related three 12-hour move in a week, the employer would be compelled to salary the employee 12 hrs of overtime (four hrs of overtime each workday because that exceeding eight hours) under this system.
Some employers who use the 8/80 plan offer employees the option of functioning a 12-hour change schedule in exchange because that a lower base hourly rate. (The rate must of food exceed the applicable minimum wage). The lower base hourly price helps balance out the expense of overtime obligations while preserving other services of the 8/80 system. This practice was recently reviewed and approved by the U.S. Court the Appeals because that the 9th Circuit.
A California hospital that used the 8/80 setup gave nurses the option of working eight-hour shifts or 12-hour shifts. Nurses who functioned 12-hour shifts to be paid in ~ a lower rate that pay. Due to the fact that the hospital was compelled to salary overtime for every hours operated in overabundance of eight hrs a day, the weekly incomes earned by employee on 12-hour move were similar to the salaries of employee on eight-hour shifts.
A class activity lawsuit filed versus the hospital alleged that the use of different hourly rates violated the FLSA. In December 2010, the nine Circuit determined that the payment of different rates of pay to be lawful, so lengthy as the rate reduction was no designed to circumvent employees' legal rights under the law. In particular, the Court found there was nothing the prohibited an employer from paying employees various rates of pay when they to be assigned to various shifts.
Correctly Calculating Compensation
Calculating one employee's constant rate of pay can sometimes be complex and time-consuming. Particularly in hospitals and also other health care settings, the result is regularly far various from what meets the eye. Mistakes deserve to be costly. It's a great idea to review your payroll methods to ensure the the regular rate of pay is gift calculated correctly. That may also be beneficial to evaluate whether the 8/80 option might be proper for every or some of your employees.
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For assistance, employers deserve to consult the federal Department of Labor's fact Sheet #54: "The medical care Industry and Calculating Overtime Pay," or call your regional Fisher Phillips attorney.