Benefits and Compensation, HR Management & Compliance

Ask the Expert: Shift Differential Pay Practices

What is a common shift differential pay amount for hourly employees?

Although the Fair Labor Standards Act (FLSA) does not require private employers to provide differential or premium pay to employees (outside of overtime pay of time and a half over 40 hours in a workweek), many employers will reward their employees with additional pay in various situations

Employer practices vary widely on this issue. Some reasons for differential pay practices may include shift work, call-back work, weekend work and hazardous or dirty duty. The most frequently offered type of differential pay is given for specific work shifts and is common in the manufacturing industry. First-shift hours are considered to be “normal,” commonly 7 a.m. to 3 p.m., and are paid at a “base” rate.

Later hours—second and third shifts—are typically less desirable, and as a result, many employers are able to encourage workers to work these later shifts by providing a higher hourly rate via a differential added to the base rate. Employers must remember to calculate overtime properly, particularly when the nonexempt employee receives shift differentials in addition to his or her normal hourly base pay rate.

Call-back premiums are provided for work performed after normal hours, such as during a workplace emergency. The employer might choose to pay a higher hourly rate for call-back hours worked, such as double time (double the hourly rate) or triple time (three times the employee’s normal hourly rate). Another way to pay call-back premiums might be to pay the employee for more hours than he or she actually worked or a minimum number of hours.

For example, if an employee is called back to work for one hour, the employer might have a policy to provide premium pay of a minimum of two hours, even when the employee doesn’t work two hours. A higher rate of pay may be offered for work performed over a weekend or on a company-provided holiday when weekend and holiday work is not part of the employee’s regular schedule.

Work performed on a Saturday, for example, may be paid at time and a half whereas work performed on a Sunday or a holiday might be paid at double an employee’s regular hourly rate. Some states have laws requiring premium pay for work performed on weekends or holidays.

Hazard pay is often offered when workers are deployed to countries involved in a war or conflict or in situations where individuals may be directly exposed to hazards on the job (e.g., handling explosives or hazardous chemicals). Employees would typically receive the regular rate of pay for their job plus an additional hourly hazard pay rate, although some employers will provide hazard pay in the form of lump sum bonuses based on the length of the hazardous duty.

In computing an employee’s regular rate under the 40 hour overtime system, an employer must take into account any bonuses.

4 thoughts on “Ask the Expert: Shift Differential Pay Practices”

  1. I work for a global corporation. I work what was termed to me as “the crappy” shift. I am paid a 10% differential for ALL HOURS WORKED on my shift. I work many overtime hours. My company is insisting they do not have to pay overtime on my differential; nor do they owe me my differential for PTO/holidays, etc., even though my before and after shifts are at the 10% differential. You would panic if you saw my pay stubs. Could not even tell you if I have received all of the 10%. Screwy pay dates where OT is paid two to 3 pay periods later. Impossible to follow. As of 12/16, we are now on bi-weekly, supposedly up-to-date. I have been entitled to 15% since 9/1/16 and have yet to get a 15% differential. They are “working” on it. Company insists that they do not owe me overtime on my differential or for my PTO/holidays, etc. I was told this morning by a HR representative that they do not have to pay me overtime on my differential BUT that there is NOTHING IN WRITING at all regarding shift differential!!!!! But yet, she states I am not entitled to that OT pay. I’m thinking I just might need an attorney. Please let me know your thoughts on this.

    1. Personally, as far as I’ve always known. Shift differential is always the same, no double rate shift diff. Unless stated in your contract it’s straight rate. Hope that helps.

  2. I like this article. So far I only found one other similar with illustrations and industries. I work in the healthcare. My diff pay is %3.0 for 3rd shift & %1.5 for 2nd shift. wkd and holiday are 1.5 pay.

  3. Good information for federal. The state I am employed does not require shift differential, the company at which I work third shift appears to think a shift differential of 25 cents an hour “entices” employees to work undesirable shifts. The same company doesn’t differentiate between second and third shifts, paying out base pay only. The play on ignorance over a persons livelihood is unconscionable to me.

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