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This question is about salaries.
What is shift differential pay?
Shift differential pay is extra compensation for employees who work a less desirable shift. For example, employees who work an overnight shift from midnight to 8:00 am may receive a higher hourly rate than employees who do the same job but work the standard day shift.
This is typically due to the demands of the business and requiring workers at odd hours, on holidays, or for shifts that are considered to be outside of the expected norms of the job. Shift differential pay is a straightforward way of incentivizing employees to take these shifts with a boosted hourly rate.
According to surveys conducted in 2010 and 2017, shift differential pay is more common in manufacturing and in customer support roles than in other types of jobs. The third shift is typically paid at a slightly higher rate than the second shift. Holiday shifts are typically paid out at 1.5 times the employee's base rate.
Some companies have looked to compensate employees for working undesirable shifts with additional time off rather than shift differential pay. Shift differential pay is often calculated as 10% of the hourly wage for the role. Companies offering shift differential pay to salaried employees will extrapolate a theoretical wage based on yearly salary.
Shift differential pay is not the same as overtime pay. The two are complementary but not calculated in the same way, and they do not have the same legal implications. Shift differential pay is not legally required; it is simply an incentive to work shifts that are less desirable. Overtime pay is legally required.
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