For example, a company increases the pay of anyone working on its graveyard shift by 10%, or an emergency care clinic pays its doctors an extra $300 to work the second shift. Salary Survey Directory, SHRM Minimum Wages Are On the Rise in Several States. Total remuneration for employment by total hours worked. Eligible job titles and hourly rates to be paid must be authorized by the vice president, Human Resources, or a designee, following University rules governing delegation of authority. When employees with two hourly rates work overtime, their employers must calculate a blended overtime rate, also called a weighted average overtime rate. See Regulations 29 CFR 778.107. Type of shift. The FLSA requires that most employees in the United States be paid at least the federal minimum wage for all hours worked and overtime pay at not less than time and one-half the regular rate of pay for all hours worked over 40 hours in a workweek. Information provided on Forbes Advisor is for educational purposes only. might have different shift differential payments than nonunion jobs. If the same employee, paid at $12 an hour with a $100 attendance bonus, worked the same scheduled time for the bi-weekly period, under the 8 and 80 system, the employee would have worked 8 hours of overtime on Wednesday and 8 hours of overtime on Friday during the first week and 8 hours of overtime on Wednesday and 8 hours of overtime on Saturday during the second week, and would be due overtime pay as follows: 112 hours worked x $12/hour + $100 (attendance bonus) =, $1,444 (total ST compensation) 112 hours =, $12.89 (regular rate) x 80 (straight time hours) =, $19.34 (overtime rate) x 32 (overtime hours worked) =, Total earnings for the bi-weekly period =. The employee also earned a $100.00 bonus that week that was promised for helping to produce a special order for a customer two weeks earlier than previously scheduled. Before sharing sensitive information, make sure youre on a federal government site. Chriss gross pay for the night shift is: Shift differentials and overtime together can significantly increase your payroll costs. The retention bonus must be included in the regular rate calculation in overtime weeks covered by the bonus period. If so, how does it need to be calculated? Source: On weekends, the employee fills in as a receptionist and is paid $8 per hour. For example, employees with higher levels of responsibility, like managers, usually qualify for higher shift differential premiums than other employees working the same shift. Nondiscretionary bonuses are included in the regular rate of pay, unless they qualify as excludable under another statutory provision (see below). Factors Influencing Shift Differential Premiums. For example, if the employee worked 40 hours at $11 and 16 hours at $8, the following is the regular rate calculation: 40 hours x $11/hour + 16 hours x $8/hour =, $568 (total straight time compensation) 56 hours worked =, $15.21 (overtime rate) x 16 (overtime hours). For example: such as managers, usually qualify for higher shift differential premiums than other employees working the same shift. 2010Culpepper U.S. Best Homeowners Insurance for New Construction, How to Get Discounts on Homeowners Insurance. Differentials for Second Shift, Third Shift and Holidays. 207(e)(1) and (3) contain statutory provisions which address the excludability of certain bonuses. Example: Single Shift Differential . For example, guards who work the second shift still earn $15 per hour, leaving them with $120 in gross pay ($15 x 8 hours). Step 2 - Calculate Straight Pay from Shift or Job B: . The additional half-time must be computed based on the regular rate of pay. Regardless, it can be a challenge to determine when an employee is working outside their regular hours. There is no limitation in the FLSA on the number of hours employees over the age of 15 may work in any workweek. XExif MM * ( 1 2 i ' 'Adobe Photoshop CS5.1 Windows 2012:09:06 17:57:25 0221 n v( ~ H H Adobe_CM Adobe d Yes, it must be included in the regular rate. Shift differentials are more common in manufacturing and customer support jobs than in other types of jobs. An employee paid biweekly at a rate of $12 per hour plus a $100 attendance bonus, working a schedule of 56 hours per week as shown in the chart below, would be due overtime pay as follows: 56 hours worked x $12/hour + $50 (weekly bonus equivalent) =, $722 (total ST compensation) 56 hours worked =, $12.89 (regular rate) + $6.45 (half-time premium) =, 40 (straight time hours) x $12.89 (regular rate) =, 16 (overtime hours) x $19.34 (overtime rate) =. Overtime may be computed on the regular rate of pay, determined by the weighted average of the two rates. /*-->*/. @ ' endstream endobj startxref 0 %%EOF 48 0 obj <>stream SHRM also offers a convenient 6 step system to help organizations calculate the regular rate for overtime purposes when a nonexempt employee receives shift differentials. If an employer changes the pay period permanently, it must calculate wages on both the old pay period and the new pay period and pay the amount that is more advantageous to each employee in the pay period when the change was made. Picture this: Its the holiday season, and inventory is flying off the shelves at your store. The Pennsylvania employer was on the hook for $39,704 in back wages and damages to 92 employees; the Connecticut employer, $138,753 to 829 employees. The regular rate includes an employees hourly rate plus the value of some other types of compensation such as bonuses and shift differentials. Breakdown by corporate status:Public 49%; private 36%; not-for-profit 14%; government 1%., Breakdown by country:United States 95%; Canada 4%; Other 1%.. Shift differential is additional compensation intended to recognize time worked outside of day shifts. The understanding of how an employee earns one may lead to an expectation to receive the bonus regularly. Paying shift differentials as a separate salary supplement or cash bonus avoids these problems and allows for variation in the payment of premiums as shifts change. Most companies pay shift differentials to hourly employees working The following examples provide guidance on how to calculate overtime for employees who receive shift differential pay. 36 percent pay shift differentials to salaried employees. X* !NU5Tp endstream endobj 41 0 obj <>stream (Effective 7/1/2019) Supplemental Shift Premium for Nurses: For the classes of registered nurse and related job classes requiring a licensure as a registered nurse, supplemental shift premium shall be paid in the amounts and under the following conditions: See If you're on a Galaxy Fold, consider unfolding your phone or viewing it in full screen to best optimize your experience. This is $2. Shift Differential Pay Practices Survey of 202 U.S. organizations, fielded July 16-Sept. 17, 2010: .paragraph--type--html-table .ts-cell-content {max-width: 100%;} Guards work in three shifts: 7 a.m. to 3 p.m., 3 p.m. to 11 p.m., and 11 p.m. to 7 a.m. Many industries offer different shifts outside the traditional 9-5 workday. The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters. Shift differential pay. The shift differential is paid in addition to the regular hourly rate for all hours worked on the shift. A nondiscretionary bonus is a bonus that fails to meet the statutory requirements of a discretionary bonus. Next, determine her gross pay without overtime by multiplying each premium hourly rate by the number of hours spent in each role. Because the employee worked all of their shifts as night shifts, the employee's regular rate of pay during that workweek is $11 per hour. The FLSA is administered by the Wage and Hour Division of the U.S. Department of Labor. Click here to read our full review for free and apply in just 2 minutes. An effective practice used by many U.S. employers is using shift differentialspay premiums to compensate employees for working shifts other than regular weekday hours. $('.container-footer').first().hide(); [CDATA[/* >