What is hazard pay?
Hazard pay is additional compensation provided to employees who perform hazardous duties or work under physical hardship, according to the U.S. Department of Labor. The DOL further defines hazardous work as that which “causes extreme physical discomfort and distress which is not adequately alleviated by protective devices.” Hazard pay is provided either in the form of increased wages or salary, often as a way to incentivize employees to perform less attractive and hazardous duties.
Who is entitled to hazard pay?
What is hazard pay applicable to? There are no laws requiring employers to pay hazard pay. The Fair Labor Standards Act (FLSA) does not address hazard pay. It only requires that hazard pay be included as an employee’s regular pay rate when calculating overtime pay.
While hazard pay isn’t mandatory, employers should communicate all hazardous working conditions to employees. Failure to do so may result in the employer being held responsible in the case of an accident, so it’s in the employer’s best interest to fully discuss the job conditions.
If you offer hazardous duties to workers, they may request hazard pay. Unions will sometimes negotiate with employers to provide hazard pay to union employees. Employers will also sometimes offer hazard pay for nonunion employees.
Examples of hazardous conditions
Although there’s no legal definition of hazardous conditions, typically hazardous jobs usually include the following conditions:
- Hostile locations
- Extreme climate conditions
- Mines or other industrial conditions
- Health care facilities
- War zones
A construction worker performing duties in extremely hot weather, for example, may be entitled to hazard pay for certain hours worked according to the employer’s hazard pay policy. A military employee working in a hostile or war zone might also be provided with a hazard salary. Other common industries or jobs that offer hazard pay include:
- Logging
- Commercial fishing
- Pilots
- Agriculture
- Construction
- Landscaping
COVID-19 has also put many essential frontline workers at risk for exposure to the virus during common working conditions. Some employers have provided hazard pay for workers such as nurses, grocery store employees and postal workers. In certain states, government agencies have introduced their own hazard pay legislation. Check with your local government agencies to see if hazard pay legislation applies to your business and payroll.
Hazard pay rates
Hazard pay rates aren’t standardized by any laws. Employers instead determine rates when they create a hazard pay policy or agreement. Hazard pay is usually provided as a premium to typical earnings. An employee who works for hourly wages may receive an increased hourly pay rate, or a salaried employee might be paid more as part of their salary agreement. Hourly pay may also be distributed as a flat rate, such as a certain amount weekly or monthly. Additional compensation may be based on a percentage of an employee’s current earnings or as a separate pay rate.
Employees won’t usually receive hazard pay for all work performed. Instead, hazard pay is provided only for hours worked in hazardous conditions. Truck drivers, for example, might earn a 10% hazard pay bonus for hours driving in extreme weather conditions but earn normal wages for performing the rest of their duties, such as paperwork or processing tasks.
What about overtime?
Employees who are eligible to be paid overtime may be able to stack overtime and hazard pay. If an employee works in hazardous conditions and works overtime, overtime pay would usually be based on their combined base wages and hazard pay rate.
Create a hazard pay policy
If your business operates in hazardous conditions, you might decide to create a hazard pay policy either in agreement with an employee union or independently. A hazard pay policy should detail the following information:
- Which employees and jobs qualify for hazard pay
- Conditions that are considered hazardous (hot weather, hostile environment or chemical exposure, for example)
- Hazard pay rates and pay distribution information
- Relevant hazard pay laws according to local legislation
- Any exceptions to hazard pay rates or other relevant information
Once you’ve created your policy, make sure to communicate it to new and existing employees. Have employees sign a copy of the policy to prove that they’ve read and agreed to it. Signed copies of your hazard pay policy should be kept in your records. Hazard pay and working conditions should also be readily accessible to employees in the employee handbook.
