If a shift differential is given, how is overtime calculated with the differential pay?
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If a shift differential is given, how is overtime calculated with the differential pay?
Base pay + shift differential x hours worked including 1 1/2 rate for over 40; or base pay x hours worked including 1 1/2 rate for over 40 + total hours x shift differential?
Asked on February 11, 2011 under Employment Labor Law, Michigan
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 13 years ago | Contributor
You need to determine the effectively average hourly rate for the period for which overtime is due; then multiply that average by 1.5 for all hours over 40 in that week.
Example: Base rate is $10/hour, shift differential for certain shifts adds $6, for $16/hour. Employee works 40 hours at base rate, plus 8 hours on an extra shift with the differential. Employee earns 40 x 10 + 8 x 16 = 400 + 128 = $528 for working 48 hours. $528/48 = $11/hour average hourly rate. Since 8 hours were overtime, the employee gets an extra 50% of the average rate for 8 hours, or another $5.50 x 8 = another $44. In this example, just because of the numbers I chose, it worked out the same as if the hours at the shift differential rate were multiplied by 1.5, but the principal holds: divide total earnings for the week by total hours to find average hourly wage, then multiply that by 1.5 for the overtime hours.
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