Commentary & Opinion

COVID-19, hazard pay and overtime

By Jon Hyman

Sep. 30, 2020

Wage and hour compliance is complicated enough for employers. Layer a pandemic on top of wage and hour compliance, and you have an absolute nightmare for companies.

Consider, for example, hazard pay.

Suppose you are a private-sector employer that decides to offer your employees a monetary incentive to return or remain at work during the pandemic. Must you include this hazard pay in the regular rate when calculating the overtime premium for non-exempt employees receiving this payment?

According to the Department of Labor, the answer is yes.

Yes. Payments your employer provides you to perform work constitutes compensation for employment that must be included in the regular rate, subject to eight exclusions described in section 7(e) of the FLSA. None of those exclusions apply to the incentive payments described above.

The answer changes, however, if the payments are made pursuant to a state or local government program, directly from the government or indirectly passed through the employer.
Bottom line? Wage and hour issues are complex; pandemic wage and hour issues are even more complex. If you have any doubt whatsoever about whether you are correctly paying your employees, reach out to your friendly neighborhood employment lawyer for guidance.
Jon Hyman is a partner in the Employment & Labor practice at Wickens Herzer Panza. Contact Hyman at JHyman@Wickenslaw.com.

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