According to federal law, American employers must adhere to strict regulations about how they pay overtime to workers. The Fair Labor Standards Act covers most employees in the United States, including people who work in hospitals and other healthcare businesses. Find out how the FLSA applies to overtime payments for your workers, and learn more about the eight and eighty overtime system that hospitals can use.
Paying overtime – what the law says
The FLSA states that employers must pay their workers a premium rate for the hours they work beyond their normal week. For many employees, this rule applies to any hours worked above a standard 40-hour working week, provided the worker is 16 or older.
Employers don't have to automatically pay overtime for hours worked on a Saturday or Sunday or on a public holiday, but if those working hours exceed the 40-hour threshold, premium rates apply. For most employers, the calculation applies to a normal seven-day working week, but the FLSA recognizes that this approach doesn't always fit. As such, hospital managers can also apply the eight and eighty overtime system.
How the eight and eighty overtime system works
Only certain employers can use the 8 and 80 overtime system. The FLSA defines these institutions as, "primarily engaged in the sick, the aged or the mentally ill or defective who reside on the premises." The law allows this exception for these institutions because the demands of residential care do not necessarily support a conventional 40-hour working week.
Even so, strict rules apply to this overtime system. To use the 8 and 80 system:
- You must have a formal agreement in place with workers who accept this way of earning overtime. This may form part of their handbook, or you may decide to set up a separate letter confirming these details.
- You must agree to pay overtime for every hour somebody works in excess of an 8-hour shift.
- You must agree to pay overtime for every hour somebody works in excess of 80 hours during any 14-day work period.
Of course, the last two rules could duplicate each other. An employee may work 85 hours in a 14-day period, but he or she may also work five extra hours in one day. As an employer, you wouldn't have to pay overtime twice. You would only pay the premium rate once on the five hours.
Issues hospital managers face
The 8 and 80 overtime system often goes wrong because hospital managers don't accurately record the hours their people work. For example, if you're reliant on manual records, you'd probably still need to set up a spreadsheet or some other way of tallying up your workers' hours, so you can make sure you adhere to the 8 and 80 overtime system.
Some hospital managers also misunderstand how the rule works. Some medical businesses waste money because they mistakenly pay overtime twice – once for exceeding eight hours in one day and once for exceeding 80 hours in a 14-day period. According to the FLSA, there are also rules about the way you calculate the base rate on which you pay premium rates. For example, you must include shift allowances and performance-related bonuses as part of the regular rate.
As such, you can probably understand why many hospital managers now use software and automated tools to manage these payments. These tools allow you enter all the variables that relate to each staff member, so the system can then work out the regular and premium rates you must charge – and when you should charge them.
Of course, the 8 and 80 overtime system isn't right for every hospital. For example, some institutions offer 12-hour shifts as standard. If somebody works three 12-hour shifts in a week and then has four days off, you wouldn't have to pay overtime if you didn't operate the 8 and 80 overtime system. If you used that system, you'd have to pay 12 hours (3 sets of 4 additional hours) at premium rates.
The 8 and 80 overtime system is a way you can manage the staffing demands of a busy hospital, but you need to make sure you meet the necessary legal requirements. Time and attendance software tools can give you the information you need. Talk to a local supplier, such as SmartLinx Solutions LLC, for more details.