Daylight Saving Time Ends, Wage and Hour Problems Begin

On Sunday, November 6 at 2:00 a.m., daylight saving time will end and in most states clocks will be set back one hour. As it does every year, this change presents a challenge for employers whose non-exempt employees are working during that time.

This wage and hour issue will affect all employers that employ non-exempt employees with the exception of those working in Arizona and Hawaii, both of which do not observe daylight savings time.

Below are some of the wage and hour implications stemming from the end of daylight savings time:

• Employers are required to pay employees for all hours worked. However, employers whose non-exempt employees are working at 2:00 a.m. on Sunday, November 6 must pay them one additional hour of pay unless the start/end times of their shifts are adjusted in anticipation of the time change. In essence, such an employee will have worked the hour from 1:00 a.m. to 2:00 a.m. twice.
• Employers whose non-exempt employees are working at that time might owe those employees overtime compensation as a result of the time change. That is, employers must include the additional hour of work in determining the employee’s overtime compensation for the week.
• In addition, employers must take this additional hour of work into account when computing the employee’s regular rate of pay for purposes of calculating the employee’s overtime rate.

Employers also should be aware of their pay obligations at the beginning of daylight savings time in the spring. Non-exempt employees who are working on Sunday, March 11, 2012 at 2:00 a.m. – when clocks will spring forward to 3:00 a.m. – are entitled to one less hour of pay than they otherwise would have been. So, an employee scheduled to work an eight-hour shift from 11:00 p.m. to 7:00 a.m. will only have worked seven hours because essentially the employee did not work from 2:00 a.m. to 3:00 a.m.

Employers that decide to pay such workers for a full eight-hour shift are not required under the Fair Labor Standards Act (FLSA) to include that extra hour of pay in calculating employees’ regular rate of pay for overtime purposes. In addition, the FLSA prohibits employers from crediting that extra hour of pay towards any overtime compensation due to the employee.

Employers, however, should ensure that they do not have any additional obligations under a collective bargaining agreement or state law.