Shift differentials are common in the healthcare industry.
But some employers may not realize that the differential must be
calculated into the "regular rate" of pay, which is not
exactly the same thing as the hourly rate.
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. 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. Specifically, failure to
include differentials in the regular rate violates the Fair Labor
Standards Act (FLSA) and can result in penalties to the employer
from the Labor Department (DOL) as well as costly
litigation.
