By Maria Greco Danaher and Hera S. Arsen, Ogletree Deakins
On Sunday, November 4, 2018, at 2:00 a.m., daylight saving time will end. This World War I–era practice of turning back the clock one hour in the fall became a federal law in the United States when President Lyndon Johnson signed the Uniform Time Act in 1966. The jury is still out on whether “falling back” is beneficial. Claims that it helps to conserve energy are dubious. Most people probably don’t get an extra hour of sleep that night. And, the time change doesn’t actually increase the number of hours of sunlight per day. However, it does present a good opportunity for employers to examine their timekeeping practices with regard to nonexempt employees.
As most of us prepare to set our clocks back one hour this weekend, here are a few wage and hour considerations for employers.
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 nonovertime 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 10, 2019, 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. Only time will tell . . .