Pay differentials for evening or weekend work are a way of giving employees extra compensation for their flexibility. Employees who perform shift work, especially in health care, factory work or technical services, can receive a pay differential that sets their base wage above that of other employees who do the same work during a more standard workweek. Base wages or salary still make up the bulk of most employees' compensation, but differential pay can add a significant percentage to a total pay package.
Not all industries report on what shift differentials they pay, but the Bureau of Labor Statistics keeps records in high-level categories. The most highly compensated are those in the production, transportation, and material-moving sectors, who receive an average of 40 percent extra wages in shift differentials. Service industries are next at 30 percent, then in management and professions such as nursing, and natural resources, construction, and maintenance, all at 20 percent. Sales and office workers have the lowest average at 10 percent.
Shift differential pay is calculated on top of the normal wages for the hours worked during the weekend, or during evenings and over night. For instance, if an employee who makes $10 per hour works Wednesday through Sunday; his wages for the 24 hours worked on Wednesday, Thursday and Friday are calculated at his normal base rate, totaling $240. If he receives a 20 percent weekend differential, the 16 hours he works on Saturday and Sunday are calculated at $12 per hour, or $192. His total weekly wage is $432.
If a company pays a shift differential, weekend work becomes more expensive to the company than weekday work is. A company should closely examine its customers' needs to make certain that the profit received from being open on the weekends justifies the increased cost. As well, there are strict labor laws that a company must comply with when calculating the difference between normal wages and shift differential wages. If the differential is greater than 50 percent, it may be considered overtime, and if an employee works overtime during the weekend they may have to be paid both differentials.
If a company advertises a shift differential in its career literature, it's probably a sign that the company requires weekend work from its employees. However, unlike bonuses which are taxed may be taxed at a higher rate and be paid out less frequently, shift differential pay has a direct impact on your paycheck and may be like receiving an instant raise.