Daylight Saving Time (DST) will end on Sunday, November 3, 2024, at 2 AM, a practice that dates back to World War I and became federal law in the U.S. under President Lyndon Johnson with the Uniform Time Act of 1966.  While the benefits of “falling back” are still debated—energy savings are uncertain, and most people likely don’t enjoy an extra hour of sleep—what is certain is that it presents an opportunity for employers to evaluate their timekeeping and payroll practices, especially concerning nonexempt employees.

Here are some important wage and hour considerations for HR professionals to keep in mind when the clocks shift back:

1.  Accounting for the Extra Hour

Employers must pay hourly employees for all hours worked, including during the time change.  If employees work between 1 AM and 2 AM when the clocks fall back, they will effectively work that hour twice, resulting in an additional hour of work.  One option is to modify the employee’s schedule at the beginning or end of their shift to keep them at 8 hours, preventing potential daily overtime.

2.  Employers’ Overtime Obligations

When employers compensate hourly employees for the extra time worked due to the DST change, they might also need to provide overtime pay.  That additional hour could push an employee’s total hours beyond the 40-hour weekly, triggering overtime obligations under the Fair Labor Standards Act (FLSA).  Most companies have a Sunday through Saturday workweek.  Because Daylight Saving happens on a Sunday, companies have time to modify an employee’s schedule later in the week to ensure they do not go into weekly overtime.

3.  Calculating the Regular Rate of Pay

Under the FLSA, employers must calculate overtime based on an employee’s “regular rate of pay,” which encompasses all earnings in a given week.  This calculation can be more complex for employees paid via commission, tips, or bonuses.  When nonexempt employees work during the time change and earn an additional hour of compensation, this extra pay must be factored into the calculation of their regular rate of pay for overtime purposes.

4.  Legal Compliance and Local Variations

Employers should also consider state laws or collective bargaining agreements that may impose additional obligations.  Not all states follow the Dayling Saving Time practice.  Arizona (excluding the Navajo Nation) and Hawaii that do not observe it.  Additionally, 18 states have passed legislation to adopt year-round daylight saving time, though this change requires congressional approval.

What Should Companies Do to Prepare for Daylight Saving Time

Companies should be careful to do the following to avoid payroll and HR-related pitfalls when DST ends:

  • Communicate with Employees About DST: Employees should be informed beforehand on what they should expect on their timecard.
  • Modify Schedules: Shifting employee schedules before or after an overnight shift will help employees avoid overtime. Another option is to give employees an hour off during the week so they do not go into weekly overtime.
  • Verify Your Systems Aujust Automatically: To avoid errors, verify that clocks and other timekeeping systems account for the DST change. If you must change them manually, set a reminder to do so.

By proactively addressing these issues, companies can maintain payroll accuracy, ensure compliance, and avoid costly mistakes during the transition out of daylight saving time.

How We Can Help

All time clocks that Time Equipment Company offers should automatically adjust for Daylight Saving Time.  In addition, our world-class time and attendance system will calculate overtime and blended overtime if needed.  If you have questions, please contact us at (800) 997-8463 or support@timeequiment.com.