The term hazard pay refers to the premium an employee receives when working in a dangerous location or performing physically demanding tasks. The law does not require employers to provide hazard pay; it is a benefit typically negotiated through collective bargaining.
Hazard pay is normally a premium that applies to the worker's hourly rate of pay. For example, an employer may agree to pay a 20% premium when an employee is working under hazardous conditions. If that employee's normal hourly rate is $20.00, they would be entitled to a premium of $20.00 x 0.20, or $4.00 per hour. In this example, the employer would pay the worker $24.00 per hour ($20.00 standard rate + $4.00 hazard premium).
Employers are not required to provide hazard pay under the law. It is a benefit usually negotiated as part of a collective bargaining agreement. However, if an employer provides this benefit, the Fair Labor Standards Act (FLSA) requires the employer to include this premium in the employee's overtime rate of pay. For example, if a non-exempt employee's standard rate of pay is $20.00 per hour, the minimum overtime rate of pay would be $20.00 x 1.5, or $30.00 per hour. If their employer provides a 20% premium for hazard pay, an employee working overtime would be paid an additional $30.00 x 0.20, or $6.00 per hour. In this example, the employer would pay the worker a total of $36.00 per hour ($30.00 standard overtime rate + $6.00 overtime hazard premium).
If provided, the hazardous conditions generally fall into two broad categories: