Knowing that it won’t significantly affect how you do payroll, consider adding a shift differential the next time your business requires weekend or overnight work. .table thead th {background-color:#f1f1f1;color:#222;} 3 evenings x 8 hours/evening x $1/hour (shift differential), Regular rate and half-time premium computation, $408 (total ST compensation) ÷ 48 (total hours worked) =, $ 8.50 (regular rate) + $ 4.25 (half-time premium) =, 8 overtime hours x $12.75 (overtime rate) =, Example: Two Different Shift Differentials. Normal work schedule requires more than 4 hours of work between midnight and 8:00 am = 50 cents for the shift. Non Union Shift 2 - paid when at least ½ of hours worked are between 4:30 p.m. and midnight the following day. Marty typically makes $25/hr and has a differential pay of $5/hr for night shift work. Her total earnings for the 8 hours of overtime are $102. When they work the night shift they are paid a shift differential of $2 an hour. Looking for a different set of features or lower price point? This document is intended only to provide clarity to the public regarding existing requirements under the law or agency policies. The “regular rate” includes an employee’s hourly rate plus the value of some other types of compensation such as bonuses and shift differentials. 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 =. .manual-search ul.usa-list li {max-width:100%;} If your employee runs into cash problems, a payroll advance could help. There is no limitation in the FLSA on the number of hours employees over the age of 15 may work in any workweek. … Our experts take you through step-by-step processes, providing tips and tricks to help you avoid common pitfalls along the way. That one is easy! Learn how using our software-specific feature walk-throughs and how tos. Many industries pay shift differentials to employees who work outside regular hours, but differential amounts and when they’re offered vary by industry. If an employee paid under the 8 and 80 system of overtime receives the same $2,000 retention bonus after six months, the employee would be due an additional $13.77 in overtime earnings after working 95 hours, 17 of which are overtime hours, in a 14-day period as follows: $ .81 (increase in the additional half-time), $13.77 (increase in overtime earnings due to the bonus). Shift differentials come in three forms: a percentage of basic hourly pay, a dollar amount per hour, or a dollar amount per shift. Editorial content from The Blueprint is separate from The Motley Fool editorial content and is created by a different analyst team. 5545 (a) and How to Compute FLSA Overtime Pay.) First, calculate her night differential pay for each of her hourly rates. They might have one hourly wage when bartending and another when waiting tables. Compensatory Time Thus, hospitals, residential care establishments, skilled nursing facilities, nursing facilities, assisted living facilities, residential care facilities and intermediate care facilities for intellectually and developmentally disabled individuals must comply with the minimum wage, overtime and youth employment requirements of the FLSA. Fair Labor Standards Act (FLSA) FLSA Categories; Paid Time & Overtime; Compensatory Time; Shift Differential; Volunteers, Employees, and Independent Contractors; Knowledge Check; Department of Labor (DOL) Resources The Fair Labor Standards Act (FLSA) requires covered employers to pay nonexempt employees at least the federal minimum wage of $7.25 per hour effective July 24, 2009, for all hours worked and overtime pay for hours worked over 40 in a workweek. Check with your state’s labor department to know what constitutes overtime for your business. Every dollar makes a difference, and you can save more of them by taking ALL the tax deductions available to your business. The federal regulations regarding hours worked appear in 29 C.F.R. The FLSA requires overtime pay for the last three hours of his shift (35 hours worked + 8-hour shift = 43 hours). For example, guards who work the second shift still earn $15 per hour, leaving them with $120 in gross pay ($15 x 8 hours). Amounts typically range between 5 and 15 percent of base salary. This can happen if you ask employees to work second or third shifts, weekends, or holidays. #block-googletagmanagerfooter .field { padding-bottom:0 !important; } Shift differentials are not legally required, but they’re a common perk given to employees who agree to work at odd hours or on holidays. Under the FLSA, the additional half-time compensation must be paid on the regular rate which is defined as the total remuneration divided by the total hours worked. Employers also must include shift differential pay when determining an employee’s regular rate of pay. This review will help you understand what the software does and whether it’s right for you. in OT unless required by FLSA. Our priority at The Blueprint is helping businesses find the best solutions to improve their bottom lines and make owners smarter, happier, and richer. .news-button {display:none} .agency-blurb-container .agency_blurb.background--light { padding: 0; } That is, the earnings from all such rates are added together and this total is then divided by the total number of hours worked at all jobs. See Regulations 29 CFR 778.601. Thank you for signing up. Scott and Renee are taxed the same way even though they earned $600 in different ways. Most businesses will outline how shift differentials work, if they’re offered, in the employee handbook.Usually, however, differential The diner pays a $10 shift differential. They all just look at you with blank stares. You calculate shift differentials in step three of the payroll process, which calculates gross wages. However, an employee who performs two or more different kinds of work, for which different straight time hourly rates are established, may agree with his or her employer in advance of the performance of the work that he or she will be paid during overtime hours at a rate not less than one and one-half time the hourly rate established for the type of work he or she is performing during the overtime hours. If an employee works 85 hours in a 14-day pay period (including five overtime hours), a $75 bonus would increase the regular rate by $.88 an hour as follows: $ .44 (increase in the additional half-time), $2.20 (increase in overtime earnings due to the bonus). div#block-eoguidanceviewheader .dol-alerts p {padding: 0;margin: 0;} Employees covered by the FLSA, unless exempt, must receive overtime pay for hours worked beyond 40 in a workweek at a rate not less than time and one-half their regular rate of pay. You’ve extended your business hours for last-minute shoppers. For additional information, visit our Wage and Hour Division Website: http://www.wagehour.dol.gov and/or call our toll-free information and helpline, available 8 a.m. to 5 p.m. in your time zone, 1-866-4USWAGE (1-866-487-9243). We’ve done the expert research, so you don’t have to. An employee works as a nurses’ aide on a full time basis at $11 per hour. The Motley Fool has a Disclosure Policy. The .gov means it’s official. .manual-search-block #edit-actions--2 {order:2;} Fair Labor Standards Act (FLSA) FLSA Categories; Paid Time & Overtime; Compensatory Time; Shift Differential; Volunteers, Employees, and Independent Contractors; Knowledge Check; Department of Labor (DOL) Resources While the FLSA strictly monitors employees’ earnings, it doesn’t require employers to provide shift differentials or premium pay for overnight, weekend or holiday shifts. Here’s what his timecard looks like: Marty worked 16 total night shift hours, which added $80 … Her regular rate equaled $8.50 and her half-time premium is $4.25. #views-exposed-form-manual-cloud-search-manual-cloud-search-results .form-actions{display:block;flex:1;} #tfa-entry-form .form-actions {justify-content:flex-start;} #node-agency-pages-layout-builder-form .form-actions {display:block;} #tfa-entry-form input {height:55px;} Think of restaurant workers who might be both bartenders and waiters. Dwayne has earned $8.25 during 58 hours and $9.25 for 32 hours. Under section 7(j) of the FLSA, hospitals and residential care establishments may utilize a fixed work period of fourteen consecutive days in lieu of the 40 hour workweek for the purpose of computing overtime. Regular rate + the half-time premium. 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