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How Does Payroll Work for On-Call Employees?

On-call employees are required by their employers to be available for work even during the employees’ time off.

Whether you must provide on-call pay for these employees depends on a few factors. But if you’re not paying for these hours, you may be violating the Fair Labor Standards Act rules for hours worked and overtime. And that’s a recipe for hefty fines.

The first thing to know is that FLSA regulations for on-call pay apply only to nonexempt employees. For them, the on-call rate of pay is generally the same as their regular rate of pay. They receive their regular pay unless they work or wait to work more than 40 hours a week. When that happens, the FLSA states that on-call pay should be paid at an overtime rate.

But how do you know whether these on-call employees have been working or waiting to work? Calculating on-call pay can be complicated, especially when you need to pay overtime too.

Calculating on-call pay

The Department of Labor offers general guidelines for determining on-call pay. The first question is whether the employee is restricted. Is the worker free to go where they’d like while on call? Or does the on-call employee need to be either at your workplace or within a certain proximity of it? If they need to be on site or within a range, the employees are considered restricted and the on-call hours are considered hours worked.

Let’s consider a couple of examples. A person who is required to stay at a hospital while on call may be able to take a nap or watch TV but cannot leave the campus. That’s a restricted employee. An employee who does not have to be at the workplace but who cannot engage in some personal activities might also be considered restricted.

However, if a worker is able to be at home or out, able to notify their employer where they can be reached in either case, and able to take care of personal matters during their time off, even if they are restricted geographically, on-call pay likely doesn’t apply. The employer hasn’t restricted the employee’s physical movement or use of time.

Calculating hourly pay for on-call employees means multiplying the applicable pay rate by the number of hours spent working or on call. If employees work more than 40 hours per week, they are eligible for overtime pay, whether actively working or on call. Travel time might also be eligible for compensation.

On-call employees

First responders and health care professionals often need to be on call to quickly attend to urgent situations or provide medical care. Additional positions that include on-call time might include:

  • Customer service representatives.
  • Information technology workers.
  • Buildings and grounds maintenance and repair workers.
  • Veterinarians.
  • Journalists.
  • Aviators.

When workers are waiting for work and their employer limits their freedom, preventing them from using the time for personal matters, that’s on-call work that gets on-call pay.

Be sure your employees get paid accurately. Be sure you’re in compliance and paying your employees what they’re owed. Be sure to include your business’s on-call policy in your employee handbook. Additionally, be sure you understand your state’s laws. States may have on-call laws that differ from the FLSA. (Union rules may also be different.) You should familiarize yourself with these regulations when determining whether an employee’s time spent waiting for an assignment is considered work time.

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