If you work for a company that is open on a continuous basis, including evenings and even overnight, then there may be a policy in place to pay you a premium wage for working less desirable shifts. This is officially known as “shift pay”. No employer is legally obligated to provide shift pay as there are no wage and hour laws on the federal or state level that guarantee this right. However, if the company in question has promised you this premium wage as a condition of your employment, then they are entitled to pay it. If your shift pay wages have been shorted by a dishonest or negligent employer, Stop Unpaid Wages can help you recover that backpay.

What is Shift Pay?

There are companies that are open 24/7/365, including weekends, evenings, nights, and even holidays. Working some of these less desirable shifts can have a negative impact on employees. Consequently, the company in question may try to entice its workers to take on these shifts by offering a premium wage that is calculated on top of the regular rate. The difference between this shift pay and the regular rate is known as the “shift differential”.

Offering this shift differential is not compulsory as it is not required by law; many companies, however, find it to be in their best interest to do so. This provides an incentive for their employees to take these irregular work schedules.

Any kind of agreement to offer shift pay lies between the employee and the employer in question. This agreement may be implicit if it is a verbal agreement, or explicit if it is a written agreement. Because shift pay is not legally required, any case to recover unpaid shift pay would revolve around the violation of the employment contract. Essentially your legal team would argue that there was some kind of agreement between the parties for premium wages and the employer has not held up their end of the bargain. This would be a breach of contract and the governing statute is the federal Fair Labor Standards Act (FLSA).

Furthermore, if the employee belongs to a union, then they may use their “collective bargaining” power to demand this shift pay provision in their employment contracts. If the employer has violated any of the terms of the employment contract, then the employee has every right to recover their unpaid wages.

The standard shifts that generally offer the regular rate of pay usually occur during daytime hours, Monday through Friday. In other words, shifts starting at 8 or 9 AM and ending at 5 or 6 PM are considered to be standard and do not entail any sort of shift pay. Shifts that begin in the early afternoon, around 4 PM or so, and end late at night, around midnight, are known as “swing shifts” or “second shifts”. Overnight shifts beginning at around midnight and ending at 8 or 9 AM are usually known as “graveyard shifts” or “third shifts”. On average, third shifts are paid slightly higher rates than second shifts. Holiday shifts are usually paid at time and a half, or the regular rate multiplied by 1.5.

These shift differentials are most common in manufacturing and production jobs, with over 80% of companies in the manufacturing sector using shift pay to incentivize workers. It is common in other industries as well: 60% of companies in customer support and approximately 50% of companies in transportation and distribution offer these premiums. It should also be noted that within the healthcare industry, nurses are offered shift pay 48% of the time while physicians are only offered shift pay about 10% of the time. 

How to Determine the Premium Rate

Differential pay is company policy and not regulated by wage and hour laws, so there is no standardized way to make the premium rate payments. Most companies will have internal rules governing how this system will work and, if offered, will be explicitly described in either the employee handbook or the employment contract.

Employers generally use one of two methods to calculate the premium rate for their shift differentials. They may use a “flat rate formula” - this means that some predetermined amount is added to the regular rate of pay. They may also use the “percentage method” - this means that the employee’s regular rate of pay, or their “base rate”, is multiplied by some percentage amount to calculate the shift pay premium. The base rate may also be referred to as “straight-time” and is comprised of an hourly wage that was determined at the time of the employee’s hiring.

Most companies are split right down the middle on whether they employ a flat rate or the percentage method. Across all industries in the United States, 49% use the flat rate and 47% use the percentage method.

Furthermore, shift differentials are common enough that there are average percentage amounts that apply across all industries that employ these shift differentials. For swing shifts (from 3 PM to midnight) the differential is on average 7.5% more than the base rate. For graveyard shifts (from 11 PM to 8 AM) the differential is on average 10% more than the base rate.

It is also possible for salaried employees to be eligible for shift differentials. This is usually done by paying the employee in question an additional percentage of their base salary. Across all industries, approximately 25% of companies pay premiums to salaried employees for shifts worked that are not regular weekday shifts. The average shift differential for salaried swing shifts is 23% and the average shift differential for salaried graveyard shifts is 20%.

Again, the percentage amount offered will depend on the company in question as there is no legal requirement to offer the differential. Some companies, instead of paying shift differentials, offer their employees additional paid time off for working these undesirable shifts.

Factors Influencing Premium Rates

Shift differential premiums will vary depending on a variety of factors. These include job function, the employee’s level of responsibility, the presence and influence of labor unions on specific jobs, the location of work, and the type of shift in question. Employees who have extensive responsibilities, such as supervisors and/or managers, more frequently qualify for increased shift differential premiums when compared to other employees working the same shift. In some cases, seniority is also a factor in determining the premium rate offered to the employee.

Furthermore, the presence of and membership in a union drastically changes the power dynamics between employee and employer. By pooling all the employee’s interests and leveraging collective bargaining rights, unions shift the balance of power to be more equitable. Unions are also responsible for working out every possible detail of the term of employment, including calculating shift differential premiums. Any and all union agreements will be in the form of written contracts, potentially giving you an exceptionally strong case in the event that the employer has failed to pay you your premium wages. 

If it is necessary to pay overtime premium wages, then the differential must be calculated into your regular rate of pay. In cases of overtime, most employers pay workers the overtime premium at one and a half (1.5) times their hourly rate. However, they may make the error of treating shift differentials as if they were a separate and distinct compensation item.  It is possible that this was an honest and good faith error, but the employer’s failure in including the shift pay differential into your regular rate of pay will likely result in you being shorted on your wages. This includes overtime payments in workweeks where you both exceeded 40 hours and worked irregular, premium wage shifts.

In some cases, employees may be entitled to receive more than one shift pay differential. All of these various premium rates must be factored into the regular rate of pay before the overtime calculations are done. 

If your employer failed to include the differentials in your regular rate, this would violate the Fair Labor Standards Act (FLSA) and would result in financial penalties imposed on your employer by the Department of Labor (DOL). As with any unpaid wages case, you would also be entitled to recover past wages in the form of backpay.

Shift Pay and Minimum Wage

It is also important to note that the base rate must always be in accordance with federal and state minimum wage laws. In other words, it is almost always illegal, no matter what the circumstance, that your employer pays you anything less than minimum wage. There are a few very specific exceptions codified in California Labor Code, Section 1197 LC. If you are involved in an unpaid wages case to recover shift differentials that are owed to you, then the law that is most generous to you is the one that is followed when determining the regular rate of pay.

In addition to federal and state laws, there is also the possibility of municipal or county statutes that set minimum wage requirements. This is true in the county of Los Angeles, which currently has a higher minimum wage than the state of California.

Finally, if you are part of a union that grants you collective bargaining power, the union in question may have its own minimum wage requirements. If this is the case, then you will need to retain a legal team that has knowledge not only of federal and state labor laws but also understands how union by-laws interact with the larger unpaid wages case.

As of July 24, 2009, the federal minimum wage is $7.25 per hour. If you wish to file a complaint or unpaid wages lawsuit on federal grounds, then you would contact the US Department of Labor, specifically the Wage and Hour Division (WHD).

As of January 01, 2019, companies with at least 26 employees will have a minimum wage of $12.00 per hour and companies with fewer than 25 employees will have a minimum wage of $11.00 per hour. These amounts are codified under California Labor Code, Section 1182.12 LC. The California Department of Industrial Relations (also known as the DIR) is the regulatory agency that regulates and enforces these state minimum wage requirements.

Finally, as of January 01, 2019, companies with at least 26 employees in the county of Los Angeles must pay a minimum wage of $14.25 per hour and companies with fewer than 25 employees must pay a minimum wage of $13.25 per hour.

What are the Risks and Hazards of Shift Work?

The atypical work schedule that is part of these swing and graveyard shifts may result in workers who are fatigued, sleepy, and chronically underslept. Working under these conditions makes the workers more prone to errors and/or accidents and in some industries that may endanger both the worker and the wider public. The manufacturing and production sector, which uses shift pay frequently, requires that employees be alert when operating heavy machinery as part of the manufacturing process. If the employee in question is too tired to function, they may subject themselves or another employee to a critical or even fatal accident.

The same is true of transportation and distribution companies. In these scenarios, it is necessary that workers drive whatever good in question during late hours or even overnight. If the worker in question falls asleep at the wheel or is not able to maintain their concentration, they potentially pose a serious risk to themselves and everyone else on the road.

This is true of nurses in the health care sector as well. Hospitals obviously never close and it is absolutely crucial that there be staff and health care practitioners all hours of the day and night. These practitioners must always stay alert in order to provide effective and proper medical care to patients of the hospital.

All these hazards exist because working these irregular shifts makes it challenging for the employee to get enough sleep. Studies have shown that sleep after night work is generally shorter and less refreshing than sleep during normal nighttime hours. Furthermore, our brains and bodies also slow down during nighttime and early morning hours. Working these irregular shifts may also alienate the worker from family and friends as their atypical work schedule becomes effectively the opposite of everyone else’s. The stress of this shift work can exacerbate pre-existing medical conditions like heart disease and/or digestive issues. It may also cause anxiety or depression due to feelings of isolation from family and friends.

For these very reasons, it is best to try and secure shift differentials for an atypical work schedule. If your employer agrees to it, verbally or in writing, then it is absolutely vital that they keep their promise of paying you these premium wages. Failure to do so is an actionable labor offense and gives you ample ground for an unpaid wages lawsuit. You have sacrificed for the company and are fairly owed any back pay from these premium wages. It is always best to secure any kind of payment agreement in writing and have it codified in an employee contract, but California labor law still holds verbal agreements as legally binding.

What Is A Split-Shift?

In California, a split-shift occurs when a worker's schedule is broken up by an unpaid, non-working period of time in excess of sixty (60) minutes. If there is at least one (1) hour between these shifts, then the employee in question is entitled to one (1) additional hour of pay that is no less than the minimum-wage rate. Remember that the minimum wage requirement that is most generous to the employee is the one that will be applied. Furthermore, this gap in work is not a meal or rest break and it must be to the benefit of the employer.

This one (1) hour of minimum wage pay is a kind of shift pay and is formally known as a “split-shift premium”. An employee who makes more than the minimum wage may also be entitled to a split-shift premium, however, the greater their pay then the lower the split-shift premium will be. In the 2012 legal case of Aleman v. Airtouch Cellular, 4th California Appellate, the California court of appeal ruled that a split-shift premium is not owed if the employee's wages are substantially higher than the minimum wage.

If the employee requested the gap in the work schedule, then it is not considered a split-shift. Furthermore, if the employee in question resides at the place of work then they are also exempt from the split-shift premium.

If the employee's shift crosses workdays, then they may still be entitled to the split-shift premium. This is because the workday is independent of a calendar day and is defined by the employer in question. The employer may define the workday however they like as long as they are not doing so in a way to avoid paying premium wages. This is a common tactic by some unscrupulous employers to avoid paying overtime, shift pay, and split-shift premiums.

This split-shift premium for minimum wage workers is guaranteed via wage order issued by the California Industrial Welfare Commission (also known as the IWC). These wage orders are enforced by the California Department of Industrial Relations (also known as the DIR), specifically, the department known as the Division of Labor Standards Enforcement (also known as the DLSE).

Extended Shifts versus Split-Shifts

There are limitations, however, to how split-shift premiums can be paid to employees. In 2011, the California Court of Appeals ruled against the plaintiffs in the case of Securitas Security Services USA, Inc. v. Superior Court.  The plaintiffs had argued that if an employee worked a shift that stretched out over two working days, then they were entitled to a premium wage.

In this particular case, the plaintiffs were security guards for Securitas Security Services who worked the graveyard shift. The company (Securitas) determined that its workday began at midnight and ended the following midnight. As a result of this workday configuration, security guards worked shifts that began on one day and eventually ended on the following workday. The plaintiffs in the case made the legal argument that they were entitled to split-shift premiums because their shift ended in the morning and they were then required to begin their next shift several hours later during that same day. The California Court of Appeals ruled against the plaintiffs in this case. The court determined that employees are not entitled to split-shift premiums if they work overnight shifts that are uninterrupted. In other words, the court determined that there was no effective “split” in these overnight shifts.

Consequently, it is essential that you seek out legal counsel that can help you navigate the various complexities of California labor laws. In some cases, it may even appear as if aspects of the law contradict each other, so an experienced legal team will be necessary to ensure you have the best chance of recovering your unpaid wages. 

Is Your Employer Withholding Your Premium Wages?

All of this may seem overwhelmingly complicated. However, most employees will have a pretty good sense if their employer is willfully shorting them on premium wages. For one, all premium wage calculations must be tabulated and included in any paystub that is provided to the employee. It is generally a good idea to keep as much physical evidence as possible. If you can provide your legal team with an incontrovertible paper trail proving that your employer has withheld these premium wages, then it makes your unpaid wages case that much stronger.

Both federal and California labor laws explicitly forbid the employer from acting willfully and maliciously in trying to withhold premium wages from the employee in question. If you feel that the employer in question has been trying to do so, then it is best that you contact an attorney that specializes in unpaid wages cases and initiate a complaint and/or lawsuit to recover said wages. All premium wages, including overtime, shift pay, and split-shift premiums are protected under the various wage and hour laws.

Find An Unpaid Wages Attorney Near Me

If you suspect that your employer has knowingly or unknowingly shorted you on premium wages, then you need the help of Stop Unpaid Wages. We can assist you in building a case and increase the likelihood of you receiving the wages that are owed to you. If you work in California reach out to us today at 424-781-8411 and receive your complimentary legal consultation on how to get the compensation that was promised to you.