Employers may soon have some clarity on which perks must be included in workers' "regular rate" of pay, which is used to calculate overtime premiums under federal law. Shift bonuses and shift differentials must be included when calculating overtime pay. and dividing by the total number of hours worked. premium payments other than for overtime, such as night shift pay differentials and premiums paid for hazardous, arduous, or dirty work. Now we need to calculate Jane’s “regular rate,” which is her straight-time pay divided by the number of … It may include shift differentials and other variable rates of pay as well. These include: premium payments for overtime work or extra pay for work on Saturdays, Sundays, and holidays The regular rate of pay is calculated by determining the staff member's total pay for the workweek, including base rate, shift differential pay, etc. It includes hourly compensation, and also other types of pay like bonuses and commissions. Here’s an example: A personal care assistant at an assisted living facility is paid $8 an hour and overtime on the basis of the 40 hour workweek standard. Yes, all shift differential pay must be included in the calculation of the regular rate of pay used to compute an employee's overtime rate. It can even include meals! Many employers utilize incentive pay wherein an employee is paid an extra amount of money on top of his or her normal hourly rate. The most frequently offered type of differential pay is given for specific work shifts and is common in the manufacturing industry. If the employee works 30 hours in a week, that is an additional $30 they earn per week (30 x $1.00). Employees can also receive flat rate shift differentials. Calculate Regular Rate. The regular rate of pay in terms of the FLSA is not the same as the base rate or the pay an employer regularly pays an employee. Some reasons for differential pay practices may include shift work, call-back work, weekend work and hazardous or dirty duty. If the employee makes $10.00 per hour, then the overtime rate is $15.00 per hour [1 ½ times $10.00 = $15.00]. Overtime pay is 1 ½ times the employee’s “Regular Rate.” In many situations, the “Regular Rate” is simply the hourly pay rate. But some types of pay are excluded from the regular rate, like a narrow type of discretionary bonus and gifts, holiday or vacation pay, and certain benefits. Let’s say a customer support employee works third shift. It includes base pay, on-call pay, shift differentials, premium pay, stipends, and nondiscretionary lump-sum payments. Employers must include shift differential pay when determining an employee’s regular rate of pay. 2. The regular rate of pay often is a complex formula that includes all “remuneration” provided for hours worked, such as hourly pay, shift differentials, salaries, piece rates, commissions, and most bonuses. They make an additional $1.00 per hour. An effective practice used by many U.S. employers is using shift differentials—pay premiums to compensate employees for working shifts other than regular weekday hours. 2 nights x 8 hours per night x $2 per hour (shift differential) = $32; Without overtime wages, Jane should get $640 plus $320 plus her shift differential of $32, for a total of $992. Certain payments or benefits you receive are not included in your regular rate of pay. Differentials—Pay premiums to compensate employees for working shifts other than regular weekday.! Let ’ s say a customer support employee works third shift variable rates of pay hourly rate a support., and also other types of pay like bonuses and commissions, premium pay, on-call pay, differentials. 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