Original Publish Date: September 12, 2017
The Fair Labor Standards Act (FLSA) requires employers to pay certain workers at least minimum wage for all hours worked, in addition to overtime at the rate of one and one-half the employee's regular rate of pay for all hours worked in excess of 40 hours per workweek.1 Under the FLSA, a workweek is a fixed period of seven days, but is not required to be the same as the calendar week. Employers in the healthcare industry, however, may be eligible to use a different method for payment of wages and still comply with the FLSA. What is commonly known as the “8 and 80 system” extends the overtime requirement over a 14-day period, as opposed to a seven day period. Since hospitals and other healthcare facilities never close, use of the 8 and 80 exception to FLSA’s overtime rules give employers staffing flexibility, without incurring overtime.
What Employers and Which Employees Qualify to Use an 8 and 80 Overtime System?
Hospitals and other institutions “primarily engaged in the care of the sick, aged, or the mentally ill” who reside there qualify for the exception to the standard overtime rules imposed on other types of employers under Section 7(j) of the FLSA. As a result, most inpatient health care facilities, such as skilled nursing facilities, assisted living facilities and facilities for the mentally challenged are eligible to pay overtime under the 8 and 80 system. Health care companies that provide services for patients who do not reside at the facility are not eligible to use this payment scheme.
Occupations eligible for the 8 and 80 overtime system include nurses, nurse aides, orderlies and patient attendants, laboratory technicians and other employees who provide direct patient care or support services. While physicians are considered healthcare employees, they are typically exempt employees and not subject to rules governing overtime pay. Some registered nurses are also considered exempt from overtime.
Here’s How It Works
For hospitals and other healthcare facilities wishing to pay employees under an 8 and 80 system, three rules must be strictly followed. First, the employee must agree. The employer and employee must have an agreement or understanding to use the 14-day pay period for computing overtime before they work the hours that would apply.2 In an ideal world, the system should be explained and discussed with prospective employees during the employment application process and revisited on the employees’ start date. Though not required, a best practice would be to have employees sign a written agreement or acknowledgment that describes in detail how they will be paid overtime under the system. The employee handbook is another opportunity for employers to make clear that the 8 and 80 system will be used for certain positions if the employees agree in advance. Unequivocal notice of the system in the handbook and the written agreement are vital evidence of the payment arrangement, should an employee or the Department of Labor ever challenge the employer's overtime practices.
Second, 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 eight hours.3> Overtime pay for hours worked over eight in a day must be paid even if the employee works less than 80 total hours during the 14-day period. 4 For example, if an employee works a 12-hour shift, he is owed four hours of overtime for that day even if he does not work more than 80 hours during the 14-day period.
And finally, the system requires the employer to pay employees 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.5 For example, if an employee works 84 hours in the work period, he is owed four hours of overtime. But credit can be taken for any overtime paid in excess of eight hours per day. Thus, if the employee worked 84 hours during the 14-day period, including one 12-hour day, the employer must pay only four hours of overtime, not four hours in excess of the eight-hour day plus four hours in excess of the 80-hour period. An employee who works more than 80 hours in the 14-day period is entitled to overtime even if he did not work more than eight hours any day during the period (i.e., 12 shifts at seven hours each day for a total of 84 hours).
Beware! Common Pitfalls When Using an 8 and 80 Overtime System
It can be very advantageous for health care facilities to implement an 8 and 80 system as it gives them the ability to shift scheduling over a two-week period, effectively cutting the amount of time it takes to develop schedules in half. It also makes it easier for employers to change staff assignments when employees call in sick because the “standard” workweek is doubled. But these advantages are only available when an 8 and 80 system is implemented correctly. If not, employers are at risk of liability under FLSA and local wage and hour laws. If your facility is considering implementing an 8 and 80 schedule for some or all of its employees, there are some common mistakes to avoid.
A common violation occurs when an employer tries to avoid paying overtime by alternating between the regular 40-hour, seven-day workweek and the 8 and 80 system. It is true that an employer can use both the 40-hour system and the 8 and 80 system for different employees in the same facility, however, it cannot use both for a single employee. Employers need to determine which system works best for which positions and not deviate from that determination. The Department of Labor directly cautions employers against this gamesmanship by stating that alternating back and forth between schedules “to take advantage of less onerous overtime pay liabilities with respect to particular work schedules under one system than under the other are not permissible.”6
Another common mistake is not properly accounting for all work time. For example, if an employee’s meal break is frequently interrupted due to a work necessity, whether to care for a patient or a request from a facility manager, the interrupted meal break must be compensated.
But far and away, the most common mistake made under an 8 and 80 system is not paying overtime for hours worked in excess of eight hours a day. Many healthcare employers incorrectly assume this system allows them to pay overtime only if the employee works more than 80 hours during the 14-day period. Not so. Remember, this exception is known as the “8 and 80” system, not the “8 or 80” system. If an employee working under an 8 and 80 system is allowed to work a shift longer than eight hours, that employee is entitled to overtime for each hour worked over eight during that shift. Likewise, an employee under an 8 and 80 system who works more than 80 hours in a two-week period is entitled to overtime, even if the employee has not worked more than eight hours in any given day during that 14-day period.
Other common mistakes include: (1) failing to correctly calculate the employee's regular rate by omitting shift differential pay and performance-based bonuses; (2) failing to add hours worked in more than one department or at more than one facility when determining the total hours worked; and (3) failing to include time spent performing on-call assignments.
Grab a Calculator!
The advantages of an 8 and 80 system are not one-size fits all. To determine if it makes financial sense, employers must first determine if they are eligible. If so, the next step should be to get out a calculator and run the numbers. An 8 and 80 system does not always guarantee an actual reduction of overtime costs. If your employees typically work shifts that exceed eight hours, the 8 and 80 system will not likely be a cost-saver. For example, under the regular FLSA 40-hour, seven-day system, a nurse who typically works 12-hour shifts – three in the first week (36 hours) and four in the second (48 hours) – would not be owed any overtime for the first week and only eight hours for the second.7 But under the 8 and 80 system, the same nurse would be owed 12 hours of overtime in the first week (3 days x 4 additional hours per day) and 16 hours in the second week (4 days x 4 additional hours per day) for a total of 28 hours of overtime.
State to State Variances
If your facility is considering an 8 and 80 system, consult with a wage and hour attorney in your state to assist in navigating the complex intricacies of the law. Because wage and hour laws can vary widely from state to state, it is critical to consult with counsel to determine what alternative workweek scheduling is permitted where you operate.
Carmen Cole is a labor & employment attorney with Polsinelli LLP who represents health care organizations, companies and professionals. She has successfully defended employers in litigation under state and federal anti-harassment and anti-discrimination statutes, as well as defended against common law claims for wrongful termination, breach of contract, defamation, invasion of privacy, and other employment-related torts.
1 In some states, including Alaska, California and Nevada, overtime is also required for time worked in excess of eight hours in a day.
2 29 C.F.R. Section 778.601(c).
3 29 C.F.R. Section 778.601(b).
4 29 C.F.R. Section 778.601(d).
5 29 C.F.R. Section 778.601(b).
6 29 C.F.R. §§ 778.105 and 778.601(c)
7 This example assumes the nurse is not employed in a state with overtime rules that differ from FLSA standards.