October, 2018

The Anatomy of a Healthcare Employee’s Paycheck

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The Anatomy of a Healthcare Employee’s Paycheck

As an HR Manager or Payroll Administrator in the healthcare industry, you’re responsible for making sure employees are receiving the correct type of pay based on the hours worked. Managing various pay rates can be challenging though, especially if you have to calculate them manually. This type of process can lead to paycheck errors and, even worse, upset employees.

That’s why It’s important to understand the various types of pay rates your employees may be subject to and have a solution in place to help accurately manage them. Here’s a guide explaining the anatomy of a healthcare employee’s paycheck and what you can do to ensure accurate paychecks every time.

Shift Differential Pay

Shift differential pay refers to the extra compensation an employee receives for hours worked that are outside of 8:00 am to 5:00 pm, Monday through Sunday. Some healthcare facilities operate 24/7, 365 days a year and need to properly staff their locations beyond normal day shift hours. Second, third, and holiday shifts can be undesirable, so employers need a way to incentivize employees to ensure these shifts are adequately staffed.

Figuring out how much your workers should be earning for shift differential pay can be difficult, especially if you offer different pay rates for different shifts (i.e. third vs. holiday shift). Here are some things to consider:

  • Holiday shifts are usually paid at time and a half (1.5 times base pay rate).
  • The Third shift pay rate is regularly higher than a second shift pay rate.
  • Some companies don’t pay shift differentials and instead offer additional paid time off, pay shift differentials as a cash bonus, or provide premiums within the base salary.

It’s important to be up-to-date on how differential pay is being compensated, especially if new pay rates are being implemented and employees are noticing a change in their paychecks.

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On-Call & Call-Back Pay

When someone is “on-call” they must remain on the work site while working or be within so many miles of the hospital or clinic. Most often, on-call employees can stay home and carry a beeper or cell phone so they can easily be reached when needed. On-call pay only includes the actual hours the employee worked at the hospital, not the time spent at home.

Call-back pay is when an employee has completed their shift and they are called back into work. An employee’s call-back pay is based on the specified number of hours’ pay at the current or overtime pay rate.

On-call and call-back shifts are common among healthcare employees, so it’s important to be familiar with the differentials in pay and verify the hours actually worked. This means less time spent correcting payroll errors after processing.


In-Charge Pay

In-charge pay refers to the pay grade for a certain position. An example of this would be a Pharmacist-In-Charge (PIC) or a Charge Nurse. These employees have the sole responsibility of the supervision, management and state and federal regulations within their department. Whether delegating assignments or ordering medicine, these employees have to balance both managerial and clinical tasks in their positions.

Employees in these positions play an integral part of the operations within the healthcare facility. They need to be compensated properly for the additional duties they are performing. You don’t want to lose these essential employees to a simple error because their pay stubs do not correctly reflect their in-charge pay.

Department Differential Pay

Employees, particularly in the healthcare industry, can work in multiple departments. For example, you could have a nurse that works in the emergency room one day and then in the outpatient clinic the next to ensure sufficient staffing. The pay for working in each of these departments could be entirely different.

Departments in hospitals pay nurses differently if the nurse must specialize in a specific certification or have tenure at the healthcare organization. For example, ER nurses pay higher average salaries than ambulatory nurses. Whether your nurse is covering a shift for a sick employee or because the department is short-staffed, notify them beforehand of any potential pay differences. Especially if they are going to work in a lower-paying department and won’t be earning the income in their current department.
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Overtime Pay

Unless exempt, employees included in the Fair Labor Standards Act (FLSA) are required to receive overtime pay for hours worked over 40 in a workweek at a rate no less than 1.5 times their regular pay rate. The FLSA reports there is no limit on the amount of hours employees may work in any workweek.

Although working extra hours may not be ideal, the overtime pay that comes with the extra hours can be appealing to some employees. If your department is understaffed and you need extra help, offering overtime pay can lessen the burden of finding help short-notice. However, it’s a good idea to keep an eye on the number of overtime hours your employees are working. You might find that an excess of overtime hours worked for a department warrants an additional hire or shifting of schedules.

Using Technology to Correctly Pay Your Healthcare Employees

We’ve discussed several types of employee pay rates you may encounter in the healthcare industry, but how do you track and manage them efficiently? You have to automate these workflows and the best way to accomplish this with HR technology.

A unified solution with a centralized database is designed for one-time data entry. The data is then synced across your payroll, HR, and attendance workflows eliminating the potential for errors. The right HR technology can help you automate even your most challenging workforce processes in the following ways:

  • Advanced clock rules can be assigned to employees for shift differentials, overtime, and more, saving you valuable time.
  • Multiple pay rates are calculated and applied to the correct workers automatically for accurate paychecks and happy employees.
  • Track and manage employee schedules to avoid under or overstaffing for better control over labor expenses.

Avoid Payroll Headaches

From shift differential pay to overtime pay, healthcare employers have many types of pay rates to oversee. Managing those pay rates no longer needs to be a headache with the right HR technology in place. By implementing a solution to accurately and efficiently pay your employees, you can dedicate your workday to more strategic HR and healthcare-related tasks.

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We believe managing different employee pay types and shifts shouldn’t be a time-consuming and manual process. With a unified solution, you have the power to create, assign, and edit advanced clock rules as you see fit.


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