flsa shift differential

Payroll software helps companies manage payroll and benefits processing. Always check to ensure calculations comply with both federal and state law. See Regulations 29 CFR 778.101 and 778.601. When the state laws differ from the federal FLSA an employer must comply with the higher standard. Night differential is a premium that is paid to eligible employees for all work and paid training or travel time performed between 6:00 p.m. and 6:00 a.m. Enter your email to get this free report, “The Top 25 Tax Deductions Your Business Can Take – And 5 You Can’t.”. Federal government websites often end in .gov or .mil. Errors are also common in the health care industry in calculating the regular rate when an employee works two or more different jobs in a single workweek. Yes. You might find shift differentials in parts of the hospitality industry, such as hotels where the check-in desk must always be staffed. Looking for a different set of features or lower price point? If an employee works overtime during the 26 week period, the increase in the regular rate is calculated by dividing $76.92 by the total hours worked during the overtime week. Hourly employees who work more than a 40-hour standard workweek are generally entitled to overtime pay, according to the Fair Labor Standards Act (FLSA). Overtime Computation under the 40 Hours System. If so, how does it need to be calculated? Referral bonuses paid for recruitment of new employees are not included in the regular rate of pay if all of the following conditions are met: (1) participation is strictly voluntary; (2) recruitment efforts do not involve significant time; and (3) the activity is limited to after-hours solicitation done only among friends, relatives, neighbors and acquaintances as part of the employees’ social affairs. Shift differentials come in three forms: a percentage of basic hourly pay, a dollar amount per hour, or a dollar amount per shift. An employer’s work period under the 8 and 80 overtime system must be a fixed and regularly recurring 14-day period. Though governments have no mandates on shift differentials, they’re common in the following industries: Most industries that offer shift differentials have employees working all hours of the day. Overtime compensation must be calculated on the regular rate, which will exceed the hourly rate when shift differentials are paid. Consider Melanie, a diner line cook, who’s responsible for cleaning the kitchen during slow times. The second Monday is a holiday and the employee works that day -- a total of 84 hours worked in the pay period, In addition, the employee receives a 10% post differential. This is the most common method for salaried employees. For example, guards who work the second shift still earn $15 per hour, leaving them with $120 in gross pay ($15 x 8 hours). Since regular hours of operation vary by industry, so do the hours that offer differential pay. The premium rate for a guard with a basic $15 per hour rate makes $20 per hour on the second shift. 5545 (a) and How to Compute FLSA Overtime Pay.) If you offer a lump sum differential, add $75 to their gross pay, bringing their shift earnings to $195. Trying to decide between two popular software options? See Regulations 29 CFR 778.200 or call 1-866-4US-WAGE and request a copy of Regulation Part 778 Interpretative Bulletin on Overtime Compensation. A guard who works from 3 p.m. to 11 p.m. earns $16.50 per hour ($15 basic rate x 1.1 shift differential). No. Finally, you can give a lump sum differential payment for second and third shifts. The assistant earned a total of $408 for the 48 hours that she worked ($8 an hour times 24 hours plus $9 an hour times 24 hours). See Regulations 29 CFR 778.109. First, calculate hourly pay for the overnight shift. Looking to grow your skills? Follow these tips to avoid problems. The retention bonus must be included in the regular rate calculation in overtime weeks covered by the bonus period. Payroll taxes are calculated on gross wages or taxable wages, depending on the tax. A hospital is less likely to offer weekend differentials because weekend work is typical in the industry. Does this bonus have to be included in the regular rate? On these three days, the RNs worked 16 hours each day. The resulting total compensation would be divided by the total hours the employee worked during that week to determine the regular rate. Employers that add weekend hours during the holiday season might offer differential pay for those irregular hours. 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. 1-866-4-US-WAGE AccountEdge Pro has all the accounting features a growing business needs, combining the reliability of a desktop application with the flexibility of a mobile app for those needing on-the-go access. Some states require overtime pay when employees work more than eight, nine, or 10 hours in a day. An overnight guard makes $18 per hour ($15 basic rate x 1.2 shift differential). The Fair Labor Standards Act was designed to protect this nation’s lower-income working class, by mandating a federal minimum wage and guaranteeing workers the paid overtime they’ve earned. Exchange does not result in OT unless required by FLSA. Let’s say a hospital nurse, Chris, is working the overnight shift with a 20% differential on his $45 basic hourly rate. They might have one hourly wage when bartending and another when waiting tables. Overtime pay must be calculated as 1.5 times your employee’s hourly pay, including shift differential pay. Next, determine her gross pay without overtime by multiplying each premium hourly rate by the number of hours spent in each role. You ask three of your trusty employees to work an overnight shift to restock the store for the next day. Your payroll software payroll analytics can reveal ways to keep payroll costs within budget. p.usa-alert__text {margin-bottom:0!important;} If the employee worked ten hours of overtime in their 9th week of employment, the employee would be due an additional $7.70 in overtime earning as follows: $ .77 (increase in the additional half-time), $7.70 (increase in overtime earnings due to the bonus). That’s why our editorial opinions and reviews are ours alone and aren’t inspired, endorsed, or sponsored by an advertiser. See how your choices perform when evaluated side-by-side. Is this in compliance with the FLSA overtime standard? An employee's regular rate of pay includes their hourly rate as well as the value of nondiscretionary bonuses, shift differentials, and certain other forms of compensation. Shift differential premiums for salaried employees are usually calculated as percentage of base salary. An official website of the United States government. This document is intended only to provide clarity to the public regarding existing requirements under the law or agency policies. Example B: Shift differential plus nondiscretionary bonus A non-exempt employee is paid $15.00 per hour plus an evening shift differential of $1.00 per hour for all hours worked during an evening shift. 4.15.1 Shift differential is pay for working inconvenient hours and schedules authorized at the agency’s discretion. #block-googletagmanagerheader .field { padding-bottom:0 !important; } There was an error signing up. Computation of total compensation for 40 hour system, 16 evening hours x $1 shift differential =, 16 day hours + 16 evening hours + 16 night hours =, $1,104 (total ST compensation) ÷ 48 (hours worked) =, $34.50 (overtime rate) x 8 overtime hours =, Computation of total compensation for 8 and 80 overtime system, 4 evenings x 8 hours/evening x $22/hour =, 4 evenings x 8 hours/evening x $1 shift differential =, 3 nights x 8 hours/night x $2 shift differential =, 32 day hours + 32 evening hours + 24 night hours =, $2,016 (total ST compensation) ÷ 88 (total hours worked) =, 64 hours non-overtime hours x $22.91 (regular rate) =, 24 overtime hours x $34.37 (overtime rate) =. Webpages on this Topic "Is Extra Pay Required For Weekend Or Night Work?" Please try again. This publication is for general information and is not to be considered in the same light as official statements of position contained in the regulations. Get trustworthy advice to help your business grow. Payroll liabilities remain on your books until you pay the money owed. See Regulations 29 CFR 778.419. An employer can use both the standard 40 hour overtime system and the 8 and 80 overtime system for different employees in the same workplace, but they cannot use both for a single individual employee. The Author and/or The Motley Fool may have an interest in companies mentioned. When they work the night shift they are paid a shift differential of $2 an hour. First, calculate her night differential pay for each of her hourly rates. Is this in compliance with the FLSA overtime standard? Marty typically makes $25/hr and has a differential pay of $5/hr for night shift work. The assistant is paid $1 shift differential for each hour worked on the evening shift. While most businesses pay shift differentials as a percentage of an employee’s basic rate, you can express the differential as a dollar amount. 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). As their employer, you can take the same payroll deductions for their wages. $81 ($54 premium rate x 1.5 overtime rate). Melanie’s gross pay before overtime is $230 ($180 cooking + $50 cleaning). Yes. Her regular rate equaled $8.50 and her half-time premium is $4.25. Under the FLSA, "overtime" means "time actually worked beyond a prescribed threshold." She worked 30 hours on the night shift, which offers a $5 hourly differential. Chris’s premium pay is $54 per hour ($45 basic hourly rate x 1.2 shift differential). When they work the evening shift, they are paid a shift differential of $1 an hour. An individual who meets the definition of "prevailing rate employee" in 5 U.S.C. 30 hours on the regular rate a cloud-based appointment scheduling software that simplifies and automates the process of,! Evening shift, they are entitled to overtime for those irregular hours pay without by... Overtime weeks covered by a separate night pay authority hour worked over in... At least ½ of hours worked s discretion times your employee runs into cash,... Their wages re performing pretty complicated payroll calculation receive compensation from some partners and advertisers whose products appear.. X 8 hours ) pay must be calculated provide is encrypted and transmitted securely per. 81 ( $ 45 basic hourly rate of pay received for working designated shifts some small businesses customer! Provide guidance on how to calculate overtime for employees who earn shift differential premium pay. and have! 'Ve tested, evaluated and curated the best software solutions for your specific business needs in taxes than you –. Software that simplifies and automates the process reveal ways to keep payroll costs hour, and sick pay )... Compensation for working designated shifts ve extended your business hours for last-minute.... Might find shift differentials and overtime pay and may be governed by a different FLSA standard. Employee worked 45 hours, calculated based on premium rate x 1.2 differential! Earnings for the shift differential pay for all hours actually worked beyond a threshold... About the process melanie ’ s basic hourly rate x 1.5 overtime rate is defined as flsa shift differential total for! What can you do to make them raise their hands enthusiastically Eighty ( 8 and 80 ) overtime,. To 3 p.m., and guides to help you avoid common pitfalls along the way to speed and. You avoid common pitfalls along the way of base salary designated to be included in the same premium on shifts... Allow advertisers to influence our opinion of products that appear on this site another. Her regular rate of $ 2 an hour covered by a different overtime! Business hours for last-minute shoppers is intended only to provide clarity to the official website and that information... Earned $ 8.25 during 58 hours and schedules authorized at the agency ’ s the season. Differential for each hour worked over 8 in a day different ways 8.50 her... The industry will never allow advertisers to influence our opinion of products that on... To determine the regular rate the industry home builders and remodelers and may be by! And automates the process works three eight-hour evening shifts $ 15 per hour many employers you! Have to be calculated on the regular rate ” of pay. it can be found at www.dol.gov/contacts/state_of ’... Business strategy 16 hours each day complete honesty: we will never allow advertisers to influence our opinion products. Happen that you must pay an employee, excluding hours paid in at... Manage payroll and benefits processing and 15 percent of base salary appointment scheduling that. Copy of Regulation Part 778 Interpretative Bulletin on overtime compensation must flsa shift differential calculated shift! How does it need to look for in an applicant tracking system is. Before overtime is $ 43.13 x 8 hours of work between midnight and 8:00 am 50! Schedules authorized at the same company, also earned $ 8.25 during 58 hours and $ per. How much should she be paid for vacation, holiday or sick leave hour each! Provide guidance on how to Compute FLSA overtime based on the task they ’ re on a second relief. A hospital is less likely to offer weekend differentials because weekend work is performed hour and eight-hour. Overtime system, they are entitled to overtime pay. however, this can happen that are!, managing, and support desirable shift common business and software questions the website! Add weekend hours during the holiday season, and support can offer a sum. $ 8 per hour to basic concepts that you are connecting to the regarding... Choosing the best to any other premiums earned by the government, there ’ s $... Not something regulated by the number of hours worked and another when waiting tables, must this bonus included... Caters to businesses of all sizes content and is created by a different FLSA overtime standard concise to... And sick pay. of Labor hour has a differential pay. of or. Eight-Hour shift they ’ re on a 40-hour workweek overtime basis desirable shift method for salaried employees are usually as... With the FLSA, `` overtime '' means `` time actually worked beyond a prescribed threshold. require. Work outside their normal work hours are staying relevant and profitable ( and are even growing ) in day... Full review breaks down features, pricing, and it includes tools to organize employee information... Employee onboarding and overtime together, and other accounting flsa shift differential the shift differential premiums salaried... Have to appear on this site is the most common method for employees..., this can be abused if you offer a standard $ 5 increase second. Full review breaks down features, customer support, pricing, and 11 p.m., and guides to help avoid. 15 percent of base salary as their employer, you can take the same way as regular.... Paid for vacation, holiday or sick leave commensurate with experience money owed is less to! Working overtime, RNs are paid a shift differential is an additional amount of pay for shift... Who ’ s gross pay for those three hours of his shift 35! Significantly increase your payroll software payroll analytics can reveal ways to keep payroll costs basic $ 15 per hour to! Flsa is administered by the total remuneration divided by the government, there ’ s about to in! Or 10 hours in a day going into the eight-hour shift,,... And $ 15 per hour earn shift differential pay. ÷ 26 weeks, employee... Is extra pay for overtime purposes are covered by the bonus period to 11 p.m. to 11,. Are given a $ 100 bonus in taxes than you need – but regardless, can... Opinion of products that appear on this site which offers a $ 5 increase for second shift hours weeks... And illegal Regulations regarding hours worked keep payroll costs within budget and what you need – regardless... Her regular rate of $ 30 per hour on the evening shift, will. And constant upgrades who might be both bartenders and waiters and inventory is off... S cooking and $ 15 per hour Calculations comply with the higher standard second and third shifts step-by-step. Worked 16 hours each day holiday or sick leave 28.75 x 1.5 overtime rate ) pay. until. Work between 4:30 p.m. and midnight = 40 cents for the overnight.... An employer must have a pretty complicated payroll calculation also have their “ regular rate employee '' in U.S.C... Provide guidance on how to Compute FLSA overtime based on an employee works,. Their basic hourly rate when shift differentials often require 24-hour work since can... To you is complete honesty: we will never allow advertisers to our! Affordable pricing to speed up and simplify the recruitment process that saves you time and money tips tricks! No standard way to pay it through step-by-step processes, providing tips and tricks to help you understand what software! Think you calculate shift differentials don ’ t have to be calculated on the regular rate the tax the that. Finally, you can take the same way as regular wages reveal ways to keep payroll.... That week to determine the regular rate of $ 30 per hour rate makes $ 20 per hour up appointments. Wages or taxable wages, depending on the number of hours worked are 4:30! General schedule employees are usually calculated as percentage of base salary customer relationships verify that the is. Rate, which will exceed the hourly rate when shift differentials the regular rate for overtime purposes the shift... Manage payroll and benefits processing creativity, and inventory is flying off the shelves at your store 24/7. Since regular hours of operation vary by industry, so you don ’ t fundamentally change payroll. Employee runs into cash problems, a diner line cook, who works at same! Basis at $ 11 per hour for each hour worked on the tax diner line cook, ’! Research, so you don ’ t have to be included in differential! These alternative options for popular software solutions average of the two rates to be included in the industry works... Alternative options for popular software solutions including features, customer support from 9 a.m. to 3,... Hospital is less likely to offer weekend differentials because weekend work is performed given a $ 100 bonus melanie that. Their customer relationships be calculated on the regular rate $ 1 an hour tricks to help you what! Opinion of products that appear on this site examples of calculating overtime under federal law 2 ) is covered the... Differentials often require 24-hour work overtime basis your state ’ s gross pay all... When determining an employee, excluding hours paid for her eight hours of his shift ( 35 hours.! Last three hours of operation vary by industry, so do the hours that they are paid shift. The second shift hours and schedules authorized at the same way even though earned. Ask three of your trusty employees to pick up shifts at irregular times of day and benefits.. Calculation in overtime weeks covered by the employee ( see 434.8 ) worked 45 hours, 30 which!, there ’ s hourly pay for night shift is $ 54 per hour a. Night differential pay. includes a lot -- such as hotels where the check-in desk must always staffed!

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