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June 14, 2011
Payroll Laws: Shift Differentials and Overtime

In a Employer Resource Institute webinar entitled "Overtime Compliance in California: How to Master the Art of Calculating What's Really Owed," Javier Rivera-Carbone, Esq., founder of Rivera Carbone, PC in Orange County described the regular rate of pay definitions.

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According to the California Department of Industrial Relations:

  • The "regular rate of pay" is the compensation an employee normally earns for the work they perform.
  • The regular rate of pay includes a number of different kinds of remuneration, such as hourly earnings, salary, piecework earnings, and commissions.
  • In no case may the regular rate of pay be less than the applicable minimum wage.

Shift differentials are a separate form of compensation.

  • Shift differentials are additional pay premiums to compensate employees for working hours and shifts other than regular weekday shifts.
  • No law requires you to pay a shift differential.
  • Find out what your shift differential is. This is normally presented as a percentage increase of your regular pay.
  • Convert the percentage to a decimal, by dividing by 100, and add one to the number. As an example, if your shift differential is 15 percent, you would end up with 1.15.
  • Multiply your normal hourly pay rate by the number you calculated. For example, if your normal pay rate was $18 per hour, you would multiply that by 1.15. You would therefore be earning $20.7 per hour, due to the shift differential. If you are curious exactly what the increase amounted to, just subtract your normal pay from the off-shift pay, which results in $2.70 per hour extra when working off shifts, according to the example.

Javier Rivera-Carbone, Esq. is the founder of Rivera Carbone, PC (www. riveracarbone.com), an employment boutique firm in Orange County. Rivera-Carbone has concentrated his practice on representing management and individuals in labor and employment law matters. He has successfully represented clients in arbitration, mediation and litigation before federal, California and Puerto Rico courts.

Need help staying on top of critical HR and Compensation issues? See all the webinars BLR has to offer.

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