A shift differential is a compensation paid to employees who regularly work outside the standard business week (Monday-Friday, 8:00 a.m. to 5:00 p.m.). A shift differential is recommended by the Director of Fiscal Operations or their appointee in coordination with Human Resources and should be administered consistently across a firm's department or unit.
Typically, only non-exempt employees are eligible for shift differentials, but according to current industry norms, some exempt employees in particular job classes may be qualified for this compensation. The shift difference is 10% of the employee's regular hourly wage, but the amount might vary depending on industry norms and the job family they are part of. The HR Department must authorize the amount requested.
The Use of a Shift Differential
Monday through Sunday, 5:00 p.m. to 8:00 a.m., are the hours of a regular shift differential schedule. If six or more of a staff member's scheduled work hours fall between 5:00 p.m. and 8:00 a.m., he or she is eligible for the shift differential. If less than six of the employee's scheduled hours fall within the shift differential eligibility hours, the employee is not qualified for the shift differential. This serves as a form of compensation for the staff.
Weekend shift differential compensation is usually not available. However, under special situations, Human Resources may approve a shift differential between 8:00 a.m. and 5:00 p.m., even during the weekends. The management is accountable for keeping accurate records that specify shift differential hours and timetables.
Inclusion of Shift Differential for Overtime Pay
The shift differential is added to the regular rate of pay to figure out overtime pay for hourly employees who are not exempt from overtime pay. This is done automatically by Workday.
Shift Differential During PTO, Holidays, and Sick Leave
A staff person must work on a shift that is eligible for the shift differential on the day before and the day after their day off in order to qualify for the shift differential payment for paid time off (PTO), sick leave, or holidays.
Factors Determining Shift Differential Premiums
The premiums for shift differentials vary according to a variety of different aspects, such as the job function, the level of responsibility, the effect that labor unions have on particular jobs, the location, and the type of shift. Take, for instance:
1. Highly Responsible Employees
A manager or someone of the standard typically qualifies for a better shift differential premium than regular employees working during the shift.
2. Labor Unions
If a job is backed up by a labor union, then the employees are more likely to have a shift differential payment system in place.
3. How Long the Work Shift is
The shift differential premium will vary depending on the number of days and the number of hours an employee has worked per week.
4. The Method of Calculation for Different Employees
Shift differentials are calculated in different ways depending on the type of employee. For example, hourly employees receive shift differentials as an extra amount earned per hour, or the differential is calculated as a percentage based on the usual hourly rate.
As for salaried employees, an additional percentage is added based on their salary for working tedious shifts. This can be done by providing a premium within the base salary or by paying shift differentials as separate payments, such as cash bonuses.