While arguments for and against the usefulness of daylight saving time continue, one thing is for sure – we all have to deal with it! Good or bad, losing an hour or gaining one, affects your business. Small business owners, specifically, should be interested in knowing how daylight saving time affects their bottom line and whether they would be better off with or without it.
So, what’s the economic impact of daylight saving time and what happens if you have an hourly employee working during that time? How does your payroll department adjust for the time change?
The question really is: “How do payroll teams manage with the loss of an hour when we spring forward?” With most wage and work hour questions, let’s turn to the Fair Labor Standards Act (FLSA) who offers some insights. Under the FLSA, overnight employees who lose an hour of work (due to the time change) don’t need to be compensated for the hour lost. Businesses can choose to pay them for that time, even though it wasn’t actually spent working. If they choose to do so, employers don’t have to include that extra hour at the employee’s regular rate when calculating overtime.
Now, let’s jump back and ask, “how does this impact employees when we fall back an hour in November? Well, hourly and non-exempt employees working at 2:00 AM end up working an additional hour that day or week. The FLSA is clear on this, stating, that if the hour is spent working, the employee must be paid for it. On the flip side, if the additional hour forces the employee’s worked hours to exceed forty, then overtime must be added.
Time Clock Management
For many companies who require employees to clock in and out, daylight saving time can be an inconvenience. Especially, if your time clock isn’t modern (or web-based) to adjust forward or back to accommodate for the time change(s). Manually adjusting time clocks can be avoided using web-based software like, Fingercheck – which do it automatically and help small businesses ensure payroll is always done accurately along with their employee’s timesheets.