Congratulations!  Your business is growing and you’ve decided that you need to have people working evenings, nights, and weekends.  Since your employees will be working ‘off hours’, you are going to give them a higher wage… a shift differential.  You decide that they will get $0.10/hr more for evenings, $0.15/hr more for nights, and $0.20/hr more for weekends.  That all sounds great, but what do you mean by that?  How are they going to be paid… exactly?

Shift differential comes in three basic flavors – 1) Built into wage; 2) By shift assignment; or 3) By time of day/week.  Each one has its own definitions and its own pros and cons.  Let’s take a look at each type…

Built into wage.  This is the easiest one.  The shift differential is just added to the employee’s base rate.  If they get $10/hr for working ‘day’ shift, they will get $10.10, $10.15, or $10.20 per hour for every hour.  Simple.  That is the pro.  It is simple and straightforward.  You are a ‘something’ shift worker and get paid that way for everything.  And that is also the con.  If they are an ‘evening’ shift worker filling in for ‘night’, or ‘weekend’, they will be shorted.  If they work first, they will be overpaid.  On top of that, they get the shift differential for vacation, sick, etc. hours.  Time for a 3% raise?  Their shift differential will also get a 3% raise.

Shift assignment.  To fix the ‘raise’ and ‘pay you a set amount no matter what’ issues, you can pay them additional money based on their shift assignments.  That is provided you have some vehicle to tell the system which shift your employee is working… and your timekeepers and schedulers remember to switch the shift indicator for each employee when they work a different shift.  The pros here are that differential is not affected by pay raises, and employees get the shift differential that coincides with their assigned shift for the day.  The cons are that you have to depend on your timekeepers and schedulers to assign the right shift code at the right times.  They may also need to make adjustments if someone works ‘a double’ and gets two different rates.

By time of day/week.  This option automates the effort, takes the guesswork out of assigning shifts, and assures that each and every shift differential is correctly paid based on your rules.  It also keeps your database cleaner by not needing a ‘shift indicator’ field.  You simply tell the system that 3p-11p is ‘evening’, 11p-7a is ‘night’, and Saturday/Sunday is ‘weekend’.  Easy!  Or is it?  The first questions that need to be considered have to do with the ‘weekend’ shift.  What time on Saturday does it start?  Midnight?  11p on Friday?  When does it end on Sunday?  Midnight?  11p Sunday?  7a Monday?  While we are at it, are there ‘weekend evening’ and ‘weekend night’ shift differentials?  What are they?

OK, you figured those questions out.  Great.  Now let’s take a closer look, shall we… What happens if I work over into another shift, do I get the differential and which one and when?  If I come in at 255p for my ‘evening’ shift, do I get that 5 minutes with shift differential?  How about 15 minutes early?  An hour early?  What if I work into another shift, how am I paid?  Do I get the differential if I only work 30 minutes?  Is there a minimum time that I have to work in the zone… in the shift?  What if I work exactly four hours in each zone?  How does my meal break play into this?  If you tell me to work ‘day’ shift, do I still get paid with my usual ‘night’ shift differential to keep me whole?  What if instead of you telling me to work ‘day’, I request it… do I lose the differential?  How will I be paid for coming in at 1p on Friday and working until 3a on Saturday (since I’ll have worked in three different shifts and into a weekend)?

Now that we’ve looked at the options and the pros, cons, and questions, which one is right for you?  That depends on a combination of your intentions, how much effort you want to put forth, and how comfortable that your timekeepers/schedulers will be uniform in their entries.  So, how do you determine which way to go?  That is easy.  Bring in someone who understands the ‘engineering’ and ‘mechanics’ of shift differentials.  Someone who can assess your intentions.  Someone who can ask you and help guide you through the maze of questions that come with shift differentials.