From the employer's perspective, inaccurate overtime calculations can create headaches for payroll processing. Add to that the Fair Labor Standards Act and its overtime rules for health care workers, and pay processing for nonexempt workers gets complex. The U.S. Department of Labor provides technical assistance to health care industry employers who struggle to understand overtime rules and calculations.
The Fair Labor Standards Act contains provisions for wages and overtime pay. Nonexempt workers are entitled to overtime pay when they work more than 40 hours in a work week. However, the labor department has created occupation-specific overtime rules for health care workers. Health care industry workers' overtime may be calculated based on work period, and the regular hourly rate must include certain additional pay.
Health Care Industry
The labor department defines the health care industry employers as residential and nonresidential facilities that provide care for patients with medical illnesses and conditions. Occupations include nurses, nurse aides, orderlies and patient attendants, laboratory technicians and other employees who provide direct patient care or support services. Physicians also are considered health care provider employees; however, they are exempt employees and not subject to rules governing overtime pay. In addition, some registered nurses are exempt workers who aren't entitled to overtime pay.
Generally, overtime pay is due based on an employee working more than 40 hours in a work week. Under the FLSA rules for health care industry overtime pay, residential care employers can base overtime calculation on an 80-hour work period. This can simplify employees' understanding of their paychecks, particularly when a 40-hour work week calculation can result in overtime being split over two paychecks. Calculating overtime based on an 80-hour work period ensures that overtime pay for the pay period is included on one paycheck. This is referred to as an "8 and 80" overtime calculation method, and both employer and employee must agree to it.
Regular Hourly Rate
Overtime pay is one and a half times an employee's regular hourly rate. However, the labor department says many health care industry employers err when it comes to including miscellaneous payments and bonuses to determine the employee's hourly rate. The regular rate for health care workers must include additional pay for shift differentials, attendance bonuses and similar extras. For example, if an employee typically earns $12 an hour, gets paid a $1 shift differential for night shifts and qualifies for a $50 bonus every two weeks for perfect attendance, the employee's hourly rate should include those additional payments. In this case, the employee's straight-time rate for night shift is $13.65 an hour, which includes the $1 shift differential plus the prorated amount of $50. The overtime rate is $13.65 multiplied by 1.5, or $20.48 an hour.
Many states have pay rules concerning minimum wage and overtime pay that differ from the federal guidelines. When federal and state laws differ, employers must follow the law that benefits employees. For example, Wisconsin law prohibits employers from using the 8 and 80 method for calculating overtime that the federal law permits.
- Comstock Images/Comstock/Getty Images