Caution Ahead! Have You Heard of Hazard Pay?

If you have employees who work in hazardous conditions, you may want to give them additional compensation for performing dangerous job duties. This is where hazard pay comes into play. Learn all about hazard pay, whether or not it’s mandatory, and how to create a hazard pay policy.

What is hazard pay?

Hazard pay is additional compensation employees who work under hazardous conditions receive. Employees may also receive hazard pay if their work involves physical hardship. The Department of Labor defines physical hardship as “Work duty that causes extreme physical discomfort and distress which is not adequately alleviated by protective devices.”

Essentially, hazard pay is an incentive businesses can offer in exchange for employees to perform dangerous job duties.

Hazard pay is common in industries with hazardous work conditions. Some fields with hazardous conditions may include:

Healthcare Mining Construction War zones Maintenance Agriculture Dangerous or extreme weather

Is hazard pay mandatory?

There is no law requiring employers to offer hazard pay to employees working in hazardous conditions. In most cases, the employer determines if they want to offer hazard pay, how much the hazard pay will be, and which employees qualify for it.

The Fair Labor Standards Act (FLSA) does not require businesses to offer employees hazard pay. And, there are currently no statewide laws that make it mandatory for private sector employers to provide hazard pay. The FLSA also does not require it for employees working during COVID-19.

However, there are some federal statutes that require hazard pay for federal employees who perform specific types of hazardous work. And some localities, like Birmingham City, Alabama, mandate hazard pay for local government workers.

Check with your state and local laws to ensure you’re compliant with any hazard pay laws and requirements.

How much is hazard pay?

Again, hazard pay rates are left up to the employer. Generally, hazard pay is given in addition to regular wages. And, an employee typically only receives hazardous duty pay for the hours where they worked in hazardous conditions.

In most cases, hazard pay is an increased hourly pay rate. Some employers may offer a flat percentage for time spent in hazardous conditions (e.g., 10% premium while working in hazardous conditions). Others may offer a set fee each month, regardless of how many hazardous hours an employee works. For example, you may pay an employee a flat $350 in hazard pay per month in addition to their regular wages.

Can employees who earn hazard pay still earn overtime pay? Yes, nonexempt employees can receive overtime in addition to hazard pay. Employees are paid overtime based on their total earnings, which includes regular wages plus the hazard pay.

Hazardous pay and COVID-19

The current COVID-19 climate has many employees asking for additional compensation for work that may put them at increased risk of exposure to the coronavirus. Some employers have begun offering hazard pay to compensate employees for the additional risk.

Although some legislation requiring hazard pay for essential workers during COVID-19 has been introduced (e.g., Heroes Fund), nothing is set in stone yet.

In light of COVID-19, some states (e.g., Massachusetts) and cities are taking things into their own hands and are introducing hazard pay legislation for essential frontline workers.

Essential frontline workers are the employees who are most likely to receive hazard

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