We are a hospital. Our
employees often switch shifts or take extra shifts for someone else. They have
their own informal system for handling switches and it works—we always have
coverage. But I’m worried about compensation issues. They handle their pay as
though they had worked their normal shifts, and they take care of paying each
other for switched shifts on their own. I think sometimes they pay quite a lot,
for example, on Christmas Eve. They all seem to find the system workable and
fair. However, some do end up working more than 40 hours a week, but we just
pay them for the 40 hours they are assigned. Is this legal as long as the
employees are satisfied?
The HR Management & Compliance Report: How To Comply with California Wage & Hour Law, explains everything you need to know to stay in compliance with the state’s complex and ever-changing rules, laws, and regulations in this area. Coverage on bonuses, meal and rest breaks, overtime, alternative workweeks, final paychecks, and more.
There are many explosive
employer risks associated with these practices, including 1) wage and hour, 2)
recordkeeping, 3) pay discrimination, 4) employee relations, and 5) labor
relations.
The primary concern is
that these shift-switching practices are likely to result in significant wage
and hour violations with respect to overtime pay and shift length. Without
control and records, the employer in this situation is at risk of severe
penalties and even class action suits.
For example, with
respect to shift length, 12-hour shifts are permissible in healthcare
organizations in
if employees voted to have a regularly scheduled workweek schedule that
includes work days of up to 12 hours within the 40-hour workweek. Although
nothing in the law prevents working two back-to-back 12-hour shifts (24
consecutive hours of work), no employee may work more than 24 consecutive hours
until the employee is off duty at least 8 hours directly following the 24
consecutive hours of work. Informally swapping shifts may result in an employee
working an illegal number of consecutive hours, putting both the employer in
danger of not conforming to the Labor Code and patients in danger if the employee
is unfit to continue working because of sleep deprivation. In both cases, the employer
would be liable.
With respect to overtime
pay, a nonexempt California employee who works more than 40 hours in one week
or more than 8 hours in one day must be compensated for all overtime hours at a
premium rate of pay (usually 11/2
the regular
rate of pay). It’s acceptable to substitute one day of work in the employee’s
schedule for another of the same length to meet the employee’s personal needs,
but the employer should officially approve and record the substitution.
Having the employees
themselves accept payment from other employees is at best a violation of
recordkeeping requirements and at worst a potential disaster for the employer
if violations of wage and hour laws result. Additionally, these practices could
potentially be construed as employees dealing as a group with the employer on
matters of working conditions, which could result in their being, de facto, a
union. So, if a bargaining unit does not currently represent the employees, the
National Labor Relations Board could consider them to be, in effect, a union because
of their existing practices.
Another major concern is
that the hospital is violating the state recordkeeping rules for time worked by
nonexempt employees. Clearly, the hospital cannot have accurate time records
for each employee as long as the practices described are in effect. Further,
illegal pay discrimination could also be an unintended result of these
practices. Although not the most critical concern here, putting pay decisions into
employees’ hands could change total cash compensation levels, causing an
apparent adverse impact on protected class employees. For example, this could happen
if members of a protected group—say older employees or members of a particular
race—tend never to get those extra shifts and overtime.
With respect to employee
relations, even though these practices are described as being agreeable to the
employees involved, there’s no certainty that that is, indeed, the case. It
would only take one employee, disgruntled for any reason, to complain to the Department
of Fair Employment and Housing, and the whole scheme would come under the
scrutiny of the regulatory agencies.
In sum, although the
employees may be satisfied now with their own system of switching shifts and paying
each other for doing so, this practice leaves the employer vulnerable to a wide
array of potential liabilities, both in terms of legal and employee relations issues.
This answer was provided
by Shari Dunn, managing principal of CompAnalysis, a compensation and performance
management consulting firm in
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