Payroll and Daylight Saving Time
The weekend feels short enough as it is. If you can believe it, this upcoming one will seem even shorter for most of us.
This weekend marks the return of daylight saving time. With it, we will enjoy nearly eight months of additional daylight—meaning you'll soon end your workday with some sun to spare. Like every spring, you'll set your clock ahead one hour this Sunday. But what happens if you have an hourly employee working at that time? How does your payroll team account for the time shift?
Covering the Basics
Before diving into the payroll implications, lets get a few things straight about daylight saving time. Simply put, this is just the practice of setting your clock forward one hour from "standard time" on the second Sunday in March until the first Sunday in November.
While most of us will change our clocks before going to bed, this weekend's shift technically starts at 2:00 AM, per rules set by the Energy Policy Act of 2005.
Spring Forward vs. Fall Back
So how do payroll teams deal with the loss of an hour when we "spring forward?" As is the case with most wage and hour questions, the Fair Labor Standards Act (FLSA) has insight to offer. Under the FLSA, overnight workers who lose an hour of work due to change do not need to be compensated for that lost hour. That said, businesses can decide to pay employees for that time, even though it was not technically spent working. If they do so, they do not have to include that extra hour in the employee’s regular rate when calculating overtime.
Now, how does this impact employees when we "fall back" in November? When we return to standard time, hourly and non-exempt employees working at 2:00 AM end up working an additional hour that day or week. The FLSA is clear here: If that hour is spent working, the employee must be paid for it. And if the additional hour forces the employee’s worked hours to exceed forty, overtime must be included.
While most of us will lose and gain an hour throughout the year, there are still some places that are not as keen on resetting their clocks. Our time change is not observed by most of Arizona, Hawaii, Puerto Rico, and the U.S. Virgin Islands. If you are reading this from any of those places, sorry for wasting your time. At least now you have a payroll fun fact for your next party.
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