Biweekly Overtime: When Is It Appropriate?
Typically, overtime is owed to nonexempt employees after exceeding working 40 hours in a workweek or, in some states, exceeding working 8 hours in a day. However, not all overtime is calculated on a daily or weekly basis.
In certain industries, special rules apply, like in the case of nonexempt employees working in hospitals and residential care establishments. Covered healthcare employers can use what is called the “8 and 80 system” to calculate overtime, which operates on a daily and biweekly basis.
Let’s go over the special circumstances that merit alternate overtime rules under the FLSA.
To give a quick overview, the federal overtime provisions contained in the Fair Labor Standards Act (FLSA) state that nonexempt employees must receive overtime pay for hours worked over 40 in a workweek, which is a regularly recurring period of seven consecutive 24-hour periods. Averaging of hours over two or more weeks is not permitted.
However, in states that have enacted their own overtime laws, employees are entitled to whichever overtime law provides them with a higher rate of pay.
As an exception to these general rules, the Wage and Hour Division of the Department of Labor (DOL), acknowledges that “Some exceptions to the 40 hours per week standard apply under special circumstances to police officers and fire fighters employed by public agencies and to employees of hospitals and nursing homes.”
Healthcare – The 8/80 Rule
According to the DOL’s Fact Sheet on The Health Care Industry and Calculating Overtime Pay, hospitals and other institutions “primarily engaged in the care of the sick, the aged, or the mentally ill” can opt to use a fixed work period of fourteen consecutive days instead of the 40 hour workweek (seven consecutive days) to compute overtime. This rule is referred to as the 8 and 80 exception.
“Under federal law, certain residential care facilities, hospitals and nursing homes can pay employees under the “8 and 80″ system, but only if employees agree to it in advance (ideally in writing),” says Chicago-based employment lawyer Bryan Wood.
“Under the ‘8 and 80’ system, employees at these facilities must receive overtime for working more than 8 hours in any one day and more than 80 hours in a 14 period. Police officers and firefighters also have unique rules under federal law. But regardless of the industry, employers should always cross-reference state law requirements, which can be different than federal law.”
Employers counted under this law include hospitals, residential care establishments, skilled nursing facilities, nursing facilities, assisted living facilities, residential care facilities and intermediate care facilities for mental retardation and developmentally disabled.
“This is an optional method of paying overtime and the employer must intend to use this period permanently of for a substantial period of time,” adds Attorney Michael Kruse of The Schroeder Group, S.C. Attorneys at Law.
“Any hours over 80 must be compensated at a rate of one-and-one-half times the regular rate of pay, but if there is overtime owed for hours worked in excess of 8 per workday, those hours can be credited to the hours that exceed 80.”
In an example, Attorney Kruse illustrates, “For example, if an employee works nine shifts of 8 hours and one shift of 10 hours, there is a total of 82 hours worked and two hours of overtime for the 10-hour day. Rather than being required to pay four hours of overtime (two for the 10 hour day and two for the hours over 80) the employer only has to pay two total hours of overtime. If the employee had eight shifts of 8 hours, one of 10 hours, and one of six hours, the employee would still get two hours of overtime for the 10-hour day.”
Police Officers & Fire Fighters Employed By Public Agencies
As previously mentioned by both attorneys, an overtime exemption is provided to law enforcement or fire protection employees under the FLSA.
“Under Section 7(k) of the FLSA, firefighters and police officers employed by public agencies can be paid overtime on a “work period” basis rather than on the typical 40-hour workweek model,” says Attorney Michael Kruse.
“Using this model, a “work period” may be from 7 consecutive days to 28 consecutive days. There is a chart that sets out the number of hours a firefighter or law enforcement office must work in the work period before they are entitled to overtime in 29 C.F.R. 553.230. This helps account for the extended shifts associated with these professions and gives the employer greater flexibility. Generally, the employer must show that it established a specific work period and that the work period was “regularly recurring.”
As you can see, in order to legally deviate from the general FLSA provisions outlining the calculation of overtime, your company must fall into either of the categories mentioned above. While unusual, there are allowances that permit certain employers to calculate overtime on an alternate work period basis.