How to calculate shift differential pay
Straight-time pay = hours × base rate + differential pay
Regular rate = straight-time pay ÷ total hours
Overtime premium = hours over 40 × regular rate × 0.5
Pay for the week = straight-time pay + overtime premium
- Pay every hour of the week at the base rate.
- Add the differential for the hours or shifts that earn it.
- Divide that straight-time pay by all the hours worked. The answer is your regular rate, a blend of the plain and differential hours.
- Every hour over 40 has already been paid once at straight time, so add half the regular rate for each of those hours.
The result is the same as paying 40 hours at the regular rate and the overtime hours at 1.5 times it.
Worked example
A worker paid $20.00 an hour works 45 hours in a workweek. Ten of those hours are night hours with a $2.00 differential.
| Step | Working | Amount |
|---|---|---|
| Base pay | 45 × $20.00 | $900.00 |
| Differential | 10 × $2.00 | $20.00 |
| Straight-time pay | $900.00 + $20.00 | $920.00 |
| Regular rate | $920.00 ÷ 45 | $20.4444 |
| Overtime premium | 5 × $20.4444 × 0.5 | $51.11 |
| Pay for the week | $971.11 |
Working the overtime out on the $20.00 base rate alone gives 5 × $10.00 = $50.00 and a week of $970.00, which is $1.11 short. The gap grows with the size of the differential, the share of night hours and the overtime hours.
Per hour, percent or per shift
- Dollars an hour: a fixed amount for each differential hour, such as $2.00 an hour for nights.
- Percent of the base rate: 15% on $18.00 is $2.70 an hour.
- Flat amount a shift: a set sum for each qualifying shift, such as $25.00 a night.
What the law says
- No federal requirement to pay one. The Department of Labor states that the FLSA does not require extra pay for night work; it is a matter of agreement between employer and employee.
- Once paid, it is part of the regular rate. 29 CFR 778.207(b) names night-shift differentials, whether a percentage of the base rate or an amount per hour, among the premiums that must be included in the regular rate.
- Two rates in one week give a weighted average. Under 29 CFR 778.115 the regular rate is total earnings for the workweek divided by total hours worked.
- California does the same. The Labor Commissioner's overtime FAQ counts shift differentials in the regular rate of pay.
Checked against the regulation
29 CFR 778.110(b) works a case with an extra payment on top of an hourly wage: $12.00 an hour, 46 hours, and a $46.00 production bonus. The bonus is a different kind of pay from a differential, but it enters the regular rate the same way. Enter it as one shift of $46.00 and the calculator gives the regulation's own figures:
| Line | 29 CFR 778.110(b) | This calculator |
|---|---|---|
| Straight-time pay | $598.00 | $598.00 |
| Regular rate | $13.00 | $13.00 |
| Overtime premium, 6 h × $6.50 | $39.00 | $39.00 |
| Pay for the week | $637.00 | $637.00 |
Questions
What is a 10% shift differential on $20 an hour?
$2.00 an hour, so a differential hour pays $22.00.
Does a flat per-shift differential change the overtime rate too?
Yes. A flat amount is added to straight-time pay like an hourly one, so it raises the regular rate for that week.
Sources
- 29 CFR 778.207, Other types of contract premium pay distinguished (eCFR)
- 29 CFR 778.115, Employees working at two or more rates (eCFR)
- 29 CFR 778.110, Hourly rate employee (eCFR)
- U.S. Department of Labor, Fact Sheet 56A: Overview of the Regular Rate of Pay
- U.S. Department of Labor: Night Work
- California Labor Commissioner: Overtime FAQ
- Tested against
- Published test cases
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