May 25, 2011
Hospitals and other institutions “primarily engaged in the care of the sick, the aged, or the mentally ill” must comply with the minimum wage and overtime requirements of the Fair Labor Standards Act (FLSA). However, Section 7(j) of the FLSA permits hospitals and residential care establishments to calculate overtime using a fixed pay period of 14 consecutive days instead of the traditional 40-hour workweek.
Requirements for Those Using the “8 and 80” System
Since hospitals and many other healthcare facilities never close, use of the “8 and 80” exception can provide staffing flexibility. Under the “8 and 80” system, a hospital or other healthcare facility pays overtime based on: (1) each hour an employee works over 8 hours in a given day; and (2) each hour an employee works over 80 hours in a consecutive 14-day period. A hospital or other healthcare facility may also use the standard system of overtime (i.e., calculating overtime based on a 40-hour workweek) for some employees and the “8 and 80” system for others, but it is not lawful to use both systems for an individual employee.
For hospitals and other healthcare facilities wishing to pay employees under an “8 and 80” arrangement, each of the following rules must be followed to avoid violating the law and creating financial liability to employees who work overtime:
- The “agreement or understanding” to use the 14-day pay period for computing overtime must be reached between the employer and employee before the work to which it is intended to apply is performed. (29 C.F.R. Section 778.601(c))
- Employees must be paid overtime at a rate not less than one and one-half times their regular rate for each day in which they work more than 8 hours. (29 C.F.R. Section 778.601(b)) Overtime pay for hours worked over 8 in a day must be paid even if the employee works less than 80 total hours during the 14-day pay period. (29 C.F.R. Section 778.601(d))
- Employees must be paid overtime at a rate not less than one and one-half times their regular rate for all hours worked in excess of 80 during the 14-day pay period. (29 C.F.R. Section 778.601(b))
It can be very advantageous for health care facilities to implement an 8 and 80 arrangement provided it is done so correctly. An 8 and 80 arrangement provides the employer with the ability to shift scheduling over a two-week period, effectively cutting in half the amount of time it takes each year to develop schedules. It also makes it easier for employers to change staff assignments when employees call in sick because the otherwise standard workweek is doubled. However, to avoid overtime liability, employers need to ensure that no employee works more than 8 hours in a given shift. Remember, this exception is called the “8 and 80” rule, not the “8 or 80” rule. If an employee working under an 8 and 80 arrangement is allowed to work a shift longer than 8 hours, the employee is entitled to overtime for each hour worked over 8 during the shift. Likewise, an employee under an 8 and 80 arrangement who works more than 80 hours in a two-week period is entitled to overtime, even if the employee has not worked more than 8 hours in any given day during that period.
Katherine Mize recognizes that both employees and employers struggle to lawfully implement an 8 and 80 system of pay. For employers, the challenge is to understand the intricacies of the law while effectively implementing an 8 and 80 arrangement that saves money and increases staffing flexibility. For employees, the challenge is to understand when the employees are, and are not, entitled to overtime pay under an 8 and 80 arrangement. Attorneys at Mize PC welcome the opportunity to assist employers and employees navigate 8 and 80 arrangements in the workplace.