The COVID-19 pandemic put hazard pay at the forefront of the national conversation. But what exactly do employers need to know about it?

Definition of hazard pay

Hazard pay is defined as providing extra compensation for the risks that a specific class of employees are subject to. According to the U.S. Department of Labor, these tasks are physically hazardous or “not adequately alleviated by protective devices.”

However, while the U.S. Department of Labor defines hazard pay, it does not regulate it. Employees are only entitled to hazard pay when they enter an employment agreement or where provided by statute.

The Fair Labor Standards Act (FLSA) mandates that hazard pay be included in the calculation of a federal employee’s overtime pay.

Are all employers required to give hazard pay?

The short answer is no. Under FLSA, hazard pay is not required for private-sector employees, only federal workers.

Who normally gets hazard pay?

A list of hazardous work for federal employees can be found in the Code of Federal Regulations, Appendix A to Subpart 1 of Part 550.

With regard to COVID-19, “essential frontline workers” are the most likely to get hazard pay. These are employees who work in essential industries and must physically show up for work, even during a pandemic.

What legally constitutes “essential frontline workers” for COVID-19 purposes is decided by federal, state or local legislators. That said, “essential frontline workers” usually include:

  • Health care workers, such as doctors, nurses, and emergency responders
  • Pharmacists
  • Firefighters
  • Postal service workers
  • Law enforcement members
  • Grocery store workers
  • Food processors
  • Delivery drivers
  • Maintenance workers
  • Warehouse workers

How long does hazard pay last?

For federal employees, additional pay for hazardous work cannot be more than 25% of the employees’ base pay. Private-sector employers set their own hazard pay rates, usually as cash incentives or spot bonuses. According to media reports, some restaurant and grocery store workers have received an extra $2 or $3 per hour in hazard pay.

Hazard pay can be short term, with a specific ending date, or it can be ongoing, with no expiration date. Some employers keep providing hazard pay as long as sales remain strong or until the threat or risk of exposure significantly declines.

Have more questions about hazard pay?

Originally, hazard pay was discussed a bit more privately between employers and their employees, or through authorized representatives. There may also be state and local laws to keep track of.

If you are a private employer with questions around how hazard pay is affected as a result of COVID-19, visit this page: https://www.dol.gov/agencies/whd/flsa/pandemic.

You can also contact your state labor office for more in-depth questions: https://www.dol.gov/agencies/whd/state/contacts.

Changing attitudes around hazard pay

Today, some private-sector employers are choosing to provide hazard pay to support employees during COVID-19. As a rule of thumb, employers that give hazard pay should apply the policy consistently across all similarly-situated employees to avoid discrimination claims.

Offering hazard pay makes a lot of sense if your work environment puts employees at high risk of contracting the virus. For example, they may not be able to reasonably avoid social distancing or come into abnormally high contact with at-risk populations.

Hazard pay may well become a more prominent aspect of future employment conversations.

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