Understanding Fair Workweek: What is Premium Pay?
Fair Workweek and its many rules have been a challenge for restaurant and hospitality businesses across the country. Amid COVID-19, complying with Fair Workweek laws has become more of a headache than ever before. So what can you do to protect your business from premium payments and other Fair Workweek-related penalties?
What is Fair Workweek premium pay?
Premium pay is a one-time payment that an employer pays to employees in addition to their earned wages. Under Fair Workweek, premium pay is required as compensation when an employer initiates last-minute changes to an employee’s work schedule or fails to notify an employee of their upcoming work shifts in advance.
Last-minute scheduling actions that may result in premium payments include:
- Canceling shifts
- Changing the location where a shift will be worked
- Changing the shift’s day, start or end time, or duration
- Assigning a new shift without consulting the employee
Are there exceptions to Fair Workweek premium payments?
In some cases, yes, there can be expectations where you may not be required to pay a Fair Workweek premium payment.
Some exceptions to Predictability Pay may include:
- Small-time changes (usually less than 15 minutes)
- The employee requests a last-minute change
- Employees swap shifts between themselves (not initiated by management)
- Unforeseen circumstances keep the business from functioning normally (natural disasters, power outages, break-ins, etc)
However, please be aware that the last bullet may be up for interpretation depending on the state or city your business is located in.
How much do Fair Workweek premium payments cost?
Premium payments can cost anywhere between $10 and $75. The amount varies based on the city or state of the business location. The conditions that require employers to pay premium payments also vary depending on location.’
The amount of notice, addition or subtraction of hours, and changes to shifts are all part of an employee’s predictability pay and can result in employers paying premiums.
In New York City, for example, Premium Pay would occur when: an employee’s place of work cancels a shift or reduced hours due to a decrease in business hours, the business is open for takeout or delivery and employees are asked to work different or additional shifts (COVID-specific), and when an employee covers the shift when a coworker is sick.
Fair Workweek premium pay breakdown
Premium payments in other cities look slightly different. In general, the closer to the shift changes are made, the greater Premium Pay employers will be required to pay.
Below are a few example city-wide breakdowns to show how Fair Workweek premiums may affect a business.
New York City
Any schedule changes between 7 and 14 days
$10-$20 per change
Any schedule changes between 24 hours and 7 days
$15-$45 per change
Any schedule changes with less than 24 hours notice
$15-$75 per change.
Pay one hour at the employee’s regular hourly rate
For subtracting hours
Pay half the regular hourly rate for hours subtracted
Pay half the regular hourly rate for hours lost
Pay one hour of predictability pay at an hourly rate
Pay one hour of predictability pay (more than 24 hours’ notice), or at least 1.5x the employee’s regular hourly rate for subtracted hours (less than 24 hours)
Any schedule changes between 24 hours and 7 days notice
Pay one hour
Any schedule changes with less than 24 hours notice
Pay two hours of premium pay if less than four scheduled hours are changed.
Pay four hours of premium pay if more than four scheduled hours are changed.
Pay one hour at the employee’s regular hourly rate.
Pay no less than half the scheduled rate of pay for hours subtracted
How to reduce Fair Workweek premium payment costs
An all-in-one compliance platform is the best way to ensure labor efficiency while navigating complex Fair Workweek premium payments. Operators should look for a tool that doesn’t just reduce Fair Workweek premium payments, but also allows them to understand which payments are necessary (such as in the case of understaffing) and which are avoidable.
Harri is the only hospitality-focused compliance platform built specifically to tackle wage and labor challenges associated with Fair Workweek compliance.
- Data-driven scheduling with built-in compliance at the federal and local levels
- Non-compliance alerts and warnings to reduce accidental premium payments
- Granular Fair Workweek reports to understand exactly when premiums were paid, to who, how much, and why
And more. Learn how Harri optimizes Fair Workweek compliance strategies while improving premium payment visibility across entire hospitality chains.
Additional Fair Workweek resources
Harri helps companies keep track of their premiums and uses powerful compliance tools to help avoid them altogether.
Want to learn more about Fair Workweek labor regulations and how to stay compliant?
Check out our list of Fair Workweek resources:
- Harri’s Fair Workweek Solution
- Complete Guide to Fair Workweek and how it impacts the hospitality industry.
- Webinar recap: Does Fair Workweek still matter during COVID-19?
- Fair Workweek readiness report surveying operators across +5,300 locations and +45,000 employees.
- Guide: What is a Good Faith Estimate?
- Guide: What is a Fair Workweek non-compliance investigation?