

Fair Labor Standards Act and Differentials

The Fair Labor Standards Act is the primary piece of federal labor law legislation, laying the foundation for most federal labor laws, including rules for overtime and minimum wage. While the FLSA strictly monitors employees’ earnings, it doesn’t require employers to provide shift differentials or premium pay for overnight, weekend or holiday shifts. Because of this, employers are free to establish policies on shift differentials as needed, as long as they meet minimum wage and overtime law.

Overtime and Shift Differentials

When an employer offers workers a shift differential, that rate of pay must be used to determine the employee’s overtime earnings if she works more than 40 hours in a workweek as required by the FLSA. For example, a worker who earns $10 per hour and an additional $0.50 per hour for a weekend shift differential, works three 10-hour shifts on Wednesday, Thursday and Friday, and two more on Saturday and Sunday. Because she earns overtime on the 10 hours worked on Sunday, her employer must pay her $15.75 per hour for that shift, or 150 percent her normal earnings for that shift.

Civil Rights Act of 1964


Differential Pay Policies

While the Civil Rights Act bars employers from providing differential pay solely on a discriminatory basis, it doesn’t require that all employees receive differential pay for the same shift. Because differential pay can be used to reward workers who don’t normally work a shift or can be secured by an individual employee’s negotiations with his employer, differential pay rates don’t need to extend to all workers on the same shift. If differentials are offered to select workers, employers should be careful that they’re not seen as being rewarded in a discriminatory manner that would be in violation of the Civil Rights Act of 1964.

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