How Does On-Call Pay Differ From Regular Pay?
Employees and independent contractors who are on-call must report to an employer or business when their services are requested. On-call employees are common in many fields of work and typically fill in during times of emergency, while on-call contractors usually work infrequently when a business has a need for extra labor. With regular pay, an employee will report to a job on a predetermined basis and will receive compensation for every hour worked.
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Time Frame
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On-call employees are not usually paid for hours they remain on-call, but they do receive pay when they must perform actively at their job. Employers can usually evade overtime laws by having multiple workers on-call without having to hire additional staff or pay existing staff overtime. By contrast, the Fair Labor Standards Act (FLSA) requires employers to compensate employees at the federal minimum wage rate or higher for every hour of work their employers requires their services.
Exceptions
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On-call employees may receive regular pay depending upon the nature of their employment. In Owens v. Local 169, the Ninth Circuit of Appeals determined that on-call employees must receive compensation at their regular pay while on-call if they cannot travel freely or use their time for personal purposes. They also must receive regular pay if their employer requires them to remain on or near their job sites.
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Expenses
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Workers who receive compensation by the hour usually receive more income than on-call workers because of the time burden and extra costs that an on-call employer imposes on his employees. For example, an on-call employee who must drive 30 minutes to report to work a few times in a shift will have to spend money more frequently on vehicle maintenance and gasoline and waste extra time compared to his regularly paid counterpart. This time expenditure can prevent an on-call worker from obtaining another job, hurting his earning potential compared to a worker who works regular hours and can schedule two jobs at the same time.
Taxes
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On-call workers pay more tax than workers who receive straight pay if they are employed as independent contractors and owe both the employee and employer share of payroll taxes. On-call employees will typically receive more tax deductions than regular paid employees because of their write-offs for unreimbursed employer expenses, medical insurance premiums, and 50 percent of self-employment tax. Unfortunately, these deductions usually offer a fraction of the costs that they paid out in expenses.
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