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Using shift differential to calculate OT rate

CxjoCxjo 42 Posts
in Compensation Vote Up0Vote Down
I recently began working for a very large company with several HR layers above me, so I had assumed that the best minds formulated our policies and procedures, however I seem to have stumbled onto a practice that violates FLSA. Before I bring my case and present it to the higher-ups I want to get other people's take on it:

We pay some non-exempt employees a shift differential. When they work certain shifts they receive $.xx more per hour. The practice has been to pay this as a flat rate, i.e. Joe Blow worked 40 hours for the week and 24 of those hours qualified for shift differential so he gets $.xx multiplied by 24 hours as a flat rate added to his check.

My understanding of FLSA (and I've been reading up on it since I discovered this practice) is that if a nonexempt employee receives a wage augment in addition to their base wage (which may be shift differentials, longevity pay, attendance pay, or certain types of "bonuses"),under the FLSA, any money received by an employee "for work" is part of the employee's regular rate of pay. Wage augments such as these are considered compensation for work, and must therefore be factored into the regular rate to determine the OT rate.

Am I on the right track here? This is a potentially HUGE issue and I need to get it straightened up.


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Comments

  • 3 Comments sorted by Votes Date Added
  • Down_the_MiddleDown_the_Middle 771 Posts
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    Yup, you're on the right track. Your definition of shift diff sounds just like the shift premium/incentive pay found in FLSA. I've seen this "oversight" more often than you'd think from employers who are large enough "to know better"......... Good luck with your evaluation
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  • Don DDon D 9,834 Posts
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    I think you're right in your reasoning. I would suggest, rather than raising the red flag and claiming credit for this discovery, you might over the course of the next two months, somehow bring this to light in a manner which will force somebody at another level to 'take credit for the discovery'. It will serve you better, as a new employee. If you do otherwise, even though you are exactly right, all the credit, blame, differing opinions and egg on various faces, will lay squarely at your feet. Then you'll be posting a problem about getting the 'silent treatment'. I know of very few companies who enjoy having somebody point out violations. This includes my own (40k employees) and I just went through this with reversal of 'The docked-holiday-pay scenario' that went on here for years.
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  • WTWT 376 Posts
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    Essentially the overtime rate must be calculated upon all remuneration received in the given pay period. This would include such things as shift differential or even bonuses.
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