For example, a worker who earns $10 per hour and an additional $0.50 per hour for a weekend shift differential, works three 10-hour shifts on Wednesday, Thursday and … Most commonly, the differential was a cents-per-hour addition to day-shifts rates, averaging 23.2 cents for work on the second shift and 29.9 cents for work on the third shift. (Only if you want to get insider advice and tips). 0000007660 00000 n While the vast majority of employers pay employees overtime at one and a half times their hourly rate, they may make the mistake of treating shift differentials as a separate compensation item. For example, if a restaurant is open past midnight, employees working the night shift may receive an extra $2 an hour. The employee's shift was expanded by 1.5 hours each day. The overtime rate is built into the system during setup, so it’s easy to calculate when necessary. 0000001457 00000 n Price: FREE to participants. Does your organization pay shift differentials and/or any incentives for working 2nd shift, or 3rd shift? For example, an employee who works the “graveyard” shift may receive a pay differential of 10%. It’s a good idea to research how your competitors handle it before implementing. The new, standard shift differential will be a flat rate, which means no matter what your base pay rate is or at which member organization you work, your time is equally valued. Morning shift - A shift … 0000009379 00000 n A number of hardship situations can result in pay differentials (e.g., additional pay for the same job) such as: shift, geographic, hazard, and expatriate pay. Legally, employers must include this premium in any overtime calculations, or they’ll face penalties. If the shift is split exactly equal, you’ll be paid the higher pay rate of the two shifts for the entire shift. *T+50% applies to pay point 12 or above, T+100% to pay point 11 or below ** Rates listed are for former APT&C staff Source: IDS, Seven Day Working Practices and Payments, March 2015 and UNISON Bargaining Agreements Database FREE Guide: How To Run Payroll For Your Small Business! Another good alternative to shift pay is a flexible work schedule. Any eligible employee who works an evening, night or weekend shift will … Shift Differential Pay Practices Survey of 202 U.S. organizations, fielded July 16-Sept. 17, 2010: • Shift differentials are more common in manufacturing and customer support jobs than in other types of jobs. Shift differential premiums for hourly employees are usually calculated as either a percentage of hourly pay rate or as an additional flat amount. Employers should have a shift pay policy in place that outlines which hours are eligible for premium pay. 0000002620 00000 n Generally, regular shift pay differential is in increments of 5% for the evening shift (6 PM to 12 AM) and 10% for the night shift (12 AM to 6 AM). Normal work hours are paid at their regular rate; you’ll add regular pay and shift pay together to determine the employee’s total gross pay. Split shifts - A shift that is “split” into two parts so that a worker may for example work the first part of the shift between 6am and 10am, while the latter takes place between 4pm and 8pm. That being said, the differential is usually paid as a percentage of wages. Charlette Beasley is a writer and editor at Fit Small Business focusing on payroll. information about trends in compensation programs and practices. Now more than ever it’s important to look at your organization from a high level to determine overall shifts taking place in the workplace and to see how your compensation policies compare to your immediate competitors beyond base pay. For second shifts, cents-per-hour differentials commonly averaged between 10 and 20 cents; percentage premiums, usually between 5 and 10 percent. LinkedIn Include the following in your shift pay policy: Invest the time you need on the front-end to create a solid shift pay policy. 0000012065 00000 n The shift differential rate is added to the normal hourly pay rate and must be applied to all Hours Worked on the shift (i.e., overtime, holiday, vacation, and sick leave pay). To ensure compliance with overtime laws, you need to track hours worked consistently. 0000020752 00000 n Third-shift differentials generally are slightly higher than second-shift differentials, according to the “2010 Culpepper U.S. Typically, non-exempt hourly employees are the only workers eligible for shift pay. However, you can opt to make holiday work hours eligible for shift pay. 0000005601 00000 n 0000008092 00000 n Employee's position must be eligible to receive shift pay differential for an employee to receive the pay. Most businesses will outline how shift differentials work, if they’re offered, in the employee handbook.Usually, however, differential Others make it easy for them to take off when needed by always having backup support. Try to keep it down to a maximum of one full page, so employees can easily digest the information. I want to stress that every environment is unique. Some industries, like banking, don’t offer premium shift pay because their hours fall within “normal business hours.” If your business operates late in the afternoon or overnight and you’re having trouble finding staff to work during those hours, you should consider offering an incentive like shift pay. If you opt for the percentage method, you can pay it out evenly over 12 months, especially if the employees are expected to regularly work outside of normal business hours. You can create different job types to separate your employees’ shift differentials from their regular hourly pay rates. Free scheduling tools, like When I Work, allow you to enter values for overtime, double-time, and daily overtime according to your state’s regulations, and it populates the data accordingly. When employees use paid vacation or sick time, they’re usually compensated at their regular hourly pay rates. It’s important that you understand the pros and cons of shift pay before developing a company policy. Click a "Log in" button below to connect instantly and comment. Some employers will allow workers to determine the days they want to work each week. 0000005698 00000 n You must be logged in to comment. Because the shift was normally eligible for shift differential, the extra hours will also be paid shift differential. For hourly employees, a shift differential may be a percentage of the employee’s base rate or an extra flat amount per hour. If you need a simple way to pay employees their regular wages, shift differentials, or alternative annual bonuses, consider Gusto for a payroll software service. Be clear, succinct, and consistent. This can be as lenient as you want. 0000004978 00000 n The total number of hours in the week is 42.5. This means you must add the overtime rate into regular hourly rates for all employees who earn shift pay and work over 40 hours a week. 0000010128 00000 n We make it easy for you to quickly access current market data for individual jobs or request custom data sets for multiple jobs that can be imported into your HRIS or market pricing system. 0000006353 00000 n It’s up to you to determine whether offering a shift differential is right for your business. The appropriate shift differential pay amount will be based on several factors including shift hours worked and competitive pay practices at comparable organizations internal and external to the department. 0000007633 00000 n Though differential pay is a popular practice, private businesses are not required to offer this incentive for holiday, weekend or night work. If an employer calculates shift pay as a percentage of an employee’s hourly wage rate, paying a tipped employee could lead to higher shift pay rates. Shift pay has historically been implemented to help employers hire and retain staff for work shifts that aren’t attractive to the majority of employees, and it has worked well. hÞb```a``õc`e`´gàg@ ~ +P–ãCó)†½P ‹¤“Š®{õ¬YŸþ+¿ŸÁÀÀ((¨¤Þ @¦Zˆ ҉ ˜AšWn_s€øíö;±L!L¢.²Ë䈼èe]¢cXŦéð!ý_¤Ó×ÖZ. Employer practices vary widely on this issue. For those cases in which there were percentage differentials, the average was 7.3 percent of day rates for the second shift and 10.0 percent for the third. You must integrate shift differential pay into any overtime pay worked in the same period. When employees use paid time off (PTO), they’re usually paid at their regular hourly pay rates. Either way, once you determine how much the premium is, you pay all hours eligible for shift pay at that rate. 0000016423 00000 n Shift differentials are usually calculated as a percentage of an employee’s pay rate, for instance 25% of a regular $10-per-hour shift equals an extra $2.50 premium, but some employers add a flat premium across the board, like $3 extra per hour. We may make money when you click on links to our partners. The payment of a shift differential is appropriate when overtime-eligible, non-bargaining unit employees, and occasionally, exempt employees by prior agreement and because of their job description, are regularly scheduled to work an evening, night or weekend shift. Alternatively, some employers will offer a supplemental premium that’s paid out once in the year, similar to a bonus. 4.16 Leave of Absence Without Pay. 0000013073 00000 n 0000020382 00000 n Please explain your organization's pay practices and/or incentives for employees working 2nd shift. To receive the shift differential, the employee must work at least one full hour after 5:00 p.m. or … Premiums calculated as a percentage of hourly … Although you can make changes later, it’s much easier to achieve buy-in from new employees when the policy is set in the beginning; people are reluctant to change. You can decide the hours, days, and the amount of the shift pay you want to offer without justifying it to the Department of Labor. 0000006858 00000 n 0000019743 00000 n 316 36 The Nonmanagement Compensation and Employee Benefits Survey collects data about more than 160 positions on current non-management hourly pay and practices in the hospital industry. Carolyn Denman, Finance Director of The Tolan Group, discusses the challenges and benefits that come along with offering paid time off: “Tracking paid time off (PTO) can cause challenges, especially in our business, as we have salaried employees as well as those on commission. First-shift hours are considered to be “normal,” commonly 7 a.m. to 3 p.m., and are paid at a … This article is part of a larger series on How to Do Payroll. Keep in mind that overtime rates are generally paid at 1.5 times (or time and a half) the “regular base pay rate.” So, if you have an employee who works 50 hours in the week, with five of those being eligible for shift pay, you’ll need to combine the employee’s regular and shift pay rates to form a new base rate before determining your overtime rate. Sign up for a free 30-day trial today. Some reasons for differential pay practices may include shift work, call-back work, weekend work and hazardous or dirty duty. Shift pay is best for employers that operate outside of the regular 9-to-5 schedule. 4.16.1 Approval of Voluntary Leave Without Pay; 4.16.2 Request for Voluntary Leave Without Pay; 4.16.3 Furlough; 4.16.4 Continuation of Benefits During Leave Without Pay; 4.16.5 Vacation Accrual While On Leave Without Pay; 4.16.6 Adjustment of Sick Leave Following Leave Without Pay 0000019979 00000 n With this alternative, you won’t have to perform any complex shift pay and overtime calculations. Sign up to receive more well-researched human resources articles and topics in your inbox, personalized for you. Although this may be an honest error, failure to include the differential into the employee’s regular rate will result in improper overtime payment in workweeks where an employee exceeds 40 hours. 0000019813 00000 n • … You can also calculate an hourly rate based on the employees’ salaries and the total average full-time hours worked in the year; once you determine an hourly rate, you find the differential pay rate using the same method recommended for hourly workers. For example, if a restaurant is open past midnight, employees working the night shift may receive an extra $2 an hour. When full time employees work beyond (either before or after) their scheduled shift, they will continue to receive the shift premium, if any, determined by their starting time, or where majority of the hours are worked, except if they work an additional full shift, they will be paid the shift premium for that shift or the shift premium for the first full shift whichever premium is greater. 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