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If You Read One Article About Daylight Savings Time’s Impact On Your Small Business Read This One

Daylight Savings Time 2021 Rockel Bookkeeping Services

If You Read One Article About Daylight Savings Time’s Impact On Your Small Business Read This One

It’s that time again – Daylight Savings. This Sunday at 2 a.m. March 14, 2021 we will spring forward and set our clocks forward an hour. This occurs every second Sunday in March.

What is Daylight Savings and why do we even do it? Many people believe it’s because of the farmers – but this is not true. Another common misconception is that Benjamin Franklin “invented” daylight savings time, but this isn’t actually true either. However, Benjamin Franklin did suggest in a facetious manner that Parisians could save money if they woke sooner in the morning rather than later in the afternoons. The idea eventually caught on and Britain attempted to pass into law a daylight savings in 1908 and failed. Followed by Germany in 1916 successfully, then the U.S. jumped on the bandwagon temporarily during WWI and WWII. In 1966 Congress passed the Uniform Time Act which instituted nationwide for clocks to go forward and backward in the Spring and Fall. States are not required to observe these time changes, but those that do must Spring forward and fall back at the same time.

As a Small Business owner, it’s important for you to be aware of the many impacts these biannual changes can have even though they may not be obvious. These can have a negative or positive impact on your Small Business’ operations. Make sure you take the time to plan ahead to prevent overlooking any small details. 

Health Impacts on Your Employees

Several studies have cited harmful effects of daylight savings time, including a loss in productivity, and disorientation as a result of the change. Changing sleep patterns, even by one hour, goes against a person’s natural circadian rhythms and has negative consequences for health. Restless nights of sleep and a decrease in quality of sleep can lead to a grogginess and moodiness in the morning and throughout the day. [1] One study found that the risk of a heart attack increases 10% the Monday and Tuesday following the springtime change. This increase in heart attacks was correlated to an increase of stress during the first week of DST.
Accidents at work are also common during this time – especially in jobs involving manual labor. [15] James Wyatt, PhD, Associate Professor at Rush University Medical Center, stated, “We’re encountering an increase in extra auto and workplace accidents on Monday or perhaps even carrying through the first week of the Spring time shift.” On that point it’s been researched that auto accidents increase during this time as well. DST increases the risk that a car accident will be fatal by 5-6.5% and results in over 30 more deaths from car accidents annually. [29] On the other side of that argument is that one study found that after Springing forward there are less car accident rates due to longer daylight hours, and less accidents involving pedestrians.
Fortunately, the opposite effect seems to be true when we Fall back. After we return to standard time in the fall, no significant differences in heart attacks, sleep, injury quantity or severity are found. But in the Fall [2] researchers found an increase in cluster headaches (sudden and debilitating headaches) after the fall time change.


The Monday after the springtime change is called “Sleepy Monday,” because it is one of the most sleep-deprived days of the year. [23] The week after the spring DST time change sees an increase in “cyber-loafing” (“Cyberloafing),[1] an act described as using computers and the internet to do things that aren’t work related during the work day.”) because they’re tired. [5]
Dr. Till Roenneberg, a German chronobiologist, who studies the body’s relationship with light and dark, notes that the human circadian clock doesn’t adjust to DST and the “consequence of that is that the majority of the population has drastically decreased productivity, decreased quality of life, increasing susceptibility to illness, and is just plain tired.” [2]

Economic Impacts – Good & Bad

Later daylight means more people shopping after work, increasing retail sales, and more people driving, increasing gas and snacks sales for eight months of the year (the time we spend in DST). [2] [18] [19]

The golf industry reported that one month of DST was worth $200 to $400 million because of the extended evening hours golfers can play. [2] The barbecue industry estimated their profits increase $150 million for one month of DST. In 2007, an estimated $59 million was saved because fewer robberies were committed thanks to the sun being up later. [3]

Chambers of Commerce tend to support DST because of the positive effect on the economy. [21] Consumer spending increases during DST, giving the economy a boost. Compared to Phoenix, Arizona, which does not have DST, Los Angeles, California, shoppers spent 3.5% less at local retailers after DST ended in the fall. [31]

William F. Shughart II, PhD, Economist at Utah State University, states that the simple act of changing clocks costs Americans $1.7 billion in lost opportunity cost based on average hourly wages, meaning that the ten or so minutes spent moving clocks, watches, and devices forward and backward could be spent on something more productive. [2]The Air Transport Association estimated that DST cost the airline industry $147 million dollars in 2007 thanks to confused time schedules with countries who do not participate in the time change. [1]

According to the Lost-Hour Economic Index, moving the clocks forward has a total cost to the US economy of $434 million nationally, factoring in health issues, decreased productivity, and workplace injuries. [32]

Payroll Confusion

During the overnight hours between Saturday March 13, 2021 to March 14, 2021 if you have employees on the clock how do you pay them? Is it straight time or overtime? This is a question a lot of employers both large and small have.

Employees who work overnight are on duty at that time.  These employees typically work an eight-hour shift, but with daylight savings, they end up losing an hour of pay. Some employers will pay the normal eight hours for that shift as a matter of policy.  However, under the Fair Labor Standards Act, they are not required to include the additional hour of pay when calculating an employee’s regular rate for overtime.  For example, if someone works 40 hours in the week, the additional hour’s pay for that daylight-saving hour would be at straight time, not overtime.

Employers who choose to pay employees for the hour lost in the spring change for daylight savings time do not include the extra hour of pay when calculating the employee’s overtime hours. In other words, overtime is only calculated on hours worked. So, an employee who works 41 hours of actual time is compensated on 40 hours of regular pay and one hour of overtime pay. The “bonus hour” that the employer voluntarily chooses to pay is separate from regular hours and overtime hours.

When returning to standard time on the first Sunday in November, clocks are moved back one hour.  Employees who work overnight will work an extra hour, for a total of nine hours of work.  Employees must be paid for all nine hours.  They are also entitled to overtime on the basis of all hours worked during the week, including the extra hour worked during the conversion to standard time.

Daylight savings is not observed in all states.  As a result, employers with employees in multiple states may have to include policies that are fair to all employees and not singularly benefit or penalize employees in different states.  States that do not observe Daylight Savings Time include Arizona and Hawaii.

Some states also have enacted overtime laws. Where an employee is subject to both the state and federal overtime laws, the employee is entitled to overtime according to the higher standard (i.e., the standard that will provide the higher rate of pay).

Overtime Laws in the States — provides a clickable map that informs what the overtime laws are in each state.


  1. Check all your technology & doublecheck it – make sure the time is accurate on March 14, 2021:
    • Meeting times for the upcoming week; send out a calendar to all employees with a reminder of the time change that occurred.
    • Scheduled Bank Deposits
    • Whether your calendar is properly syncing across all devices.
    • Devices that lock users out based on time of day.
    • Manual Clocks around the office/business or in company vehicles
    • Send out reminders for your employees to ensure their clocks are set accordingly on Saturday March 13, 2021, and follow up with on March 14, 2021.
  2. Keep Your Schedule Intact: As a small business owner, you should educate your staff on the correlation between a regular routine and improved health and wellness. When everyone is able to follow a regular schedule, they’re able to keep their circadian rhythms in check—making it easier to maintain productivity.
  3. Get Natural Light: Our bodies run on sunlight—not the clock. How can your small business incorporate this? Consider hosting outdoor lunches, encourage meetings where you’re walking around or have the meetings outside and, if possible, allow employees to take one or two 10-minute fresh-air breaks each day. If your office layout can accommodate it, consider rearranging the space so your employees are near windows so they can get the most out of natural lighting each day. While we can’t escape daylight savings, you can take steps to lessen its negative effects. Stick to your schedule, get the right amount of sleep, maintain a fitness routine, and get some natural sunlight each day in order to stay alert and well-rested. As a small business owner, it’s up to you to make your workplace an area that combats the potential pitfalls of daylight savings time. To beat the effects of the change and maintain productivity. Lead by example while at the same time encouraging your staff to follow the advice above.
  4. Move hazardous activities: Reschedule hazardous work to later in the week or, when possible, move hazardous activities to the following week once employees have had plenty of time to adjust to the new time change.
  5. Advise employees who drive: Caution staff to be extra alert when driving to reduce traffic accidents.
  6. Adjust delivery schedules accordingly: If you are in a business that relies on a daily delivery schedule, encourage employees to alert you if they don’t feel safe driving during the transition, and reschedule deliveries accordingly.
  7. Hire a Bookkeeper in Advance: This can help you to mitigate any confusion about the payroll concerns that can crop up during the Daylight Savings times and make sure you maintain a smooth transition during these times. Making sure your scheduled bank deposits, payroll and other financial operations go smoothly. If you don’t have a bookkeeper yet, no worries, I can jump in at any time to help your small business!