In their July Dental Economics article “‘Daily rate’ pay for hygienists” What could be wrong with that?” Rebecca Boartfield and Tim Twigg explore the concept of paying hygienists a flat rate for a day’s work.
“It’s a myth in the dental industry that a daily rate covers it all, reduced problems and even makes payroll easier” Boartfield and Twigg write.
As non-exempt employés—which most of them are—hygienists must be paid for all hours they work. This is true, Boartfield and Twigg write, regardless of whether they’re paid, hourly, salary or a daily rate.
“This is where dentists run into trouble with daily rate pay,” the pair writes. “It is common to believe that ‘a day’s worth of work’ can be any number of hours and all those hours will be covered by the daily rate.”
But Boartfield and Twigg say this isn’t true.
It’s important that the daily rate is defined, and if the employee works more than what is agreed upon, they must be paid more.
“For example, you may have a daily rate of $400 for eight hours of work,” they write. “If the hygienist works nine hours, his or her daily rate must be increased due to that one extra hour of work that is not covered by the daily rate.”
Defining the daily rate should always be done in writing. If there is no overtime law in the state in which you practice, the rate can cover more than eight hours a day, however it must be closely tied to the hours the hygienist will actually work. For example, you can’t say it covers 10 hours if the employee usually works eight.
The pair go onto write that another misconception is that daily rate pay means eliminating the burden of tracking employee hours.
“Under both federal and state laws, employers must record the hours worked by nonexempt employees,” they write. “The method of compensation does not eliminate this requirement. Therefore, even with daily rate pay, hygienists must track their hours.”
Nonexempt employees are eligible for overtime, and overtime must be paid when an employee works more than 40 hours in a week under state law or more than than a certain numbers of hours a day under federal law per some state laws.
Because of this, the pair writes, pay must be increased when overtime is worked, and overtime pay is time and one-half. So, if an employee makes $400 in a day, they would make $450 on a day in which overtime is worked.
“While you are required to increase pay when employees work more, you are not required to pay a full daily rate when employees work less,” they write. “Thus, if an employee’s daily rate is defined as eight hours of work and the per- son works only four hours, the daily rate can be reduced to reflect the shortage of hours. If you plan on doing this, be sure this is clearly outlined in writing to prevent any misunderstandings.”
Because of the above information, Boartfield and Twigg ultimately question whether or not a daily rate pay should be used, as it seems to fail to accomplished what it’s intended to do. And Boartfield and Twigg even go as far as to say this kind of payment makes things more complicated.
“For nonexempt employees, nothing is more straightforward than hourly pay,” they write. “Daily rate has been misconstrued to be something that it is not, and all dentists would be well advised to revisit their pay practices going forward.”