What is Hazard Pay?
During COVID-19, some employers have awarded hazard pay to frontline workers, from healthcare and delivery personnel to employees at meat processing plants and grocery stores. The thinking is that a boost in pay shows appreciation for those in lower-income, high public-facing roles and incents them to work despite the risks of exposure. Want to know more? Here are some answers to common questions about hazard pay.
What is Hazard Pay?
According to the DOL, hazard pay is additional pay for performing hazardous duty or work involving physical hardship. It typically applies in dangerous roles like mining or construction. However, the argument during COVID-19 is that essential workers required to work on site face serious health risks that entitles them to hazard pay. This is especially true when they lack adequate protective equipment.
Is it Required?
Employers aren’t required to offer hazard pay by the FLSA nor is it regulated by the DOL. However, workers may qualify for hazard pay under federal or state statute or through employment agreements or union negotiations. In addition, some federal and local lawmakers have proposed bills – and in some states passed legislation – to provide for hazard pay for essential workers who work during the health emergency.
Why Would We Offer It?
Even though you may not be required to offer hazard pay, there may be some upsides to doing so. Since these workers are putting themselves and their families at risk, additional pay can show support for those working despite threats to their safety. This is particularly true for the many essential staff not in high-paying jobs to begin with. In that way, the extra pay can boost morale and loyalty — and even your reputation in the community. In fact, several high-profile companies paid incentives at least at some point during COVID-19, including Amazon and Kroger.
How Much is Hazard Pay?
Under federal statutes that provide for hazard pay for government employees, the amount may not exceed 25 percent of an employee’s basic pay. For private employers who decide to offer the pay, the amounts are discretionary. Some companies, like Target, are paying a supplement of $2 an hour. Others have provided one-time bonuses in flat-dollar amounts. The idea is to provide some compensation for risks workers are taking while continuing to provide services to the community.
Are There Downsides?
It’s important to consider the impact of offering added pay on your bottom line. While prioritizing workers may be the right thing to do right now, it’s also critical to be able to sustain the business. And for some small employers, financially, it may be tough to do both. Weigh current revenue, cash reserves and the effect hazard pay may have on the future of your business before committing.
For questions about the impact of COVID-19 on your workforce, contact Complete Payroll Solutions at 401-332-9325.