4.16.1 Approval of Voluntary Leave Without Pay; 4.16.2 Request for Voluntary Leave Without Pay; 4.16.3 Furlough; 4.16.4 Continuation of Benefits During Leave Without Pay; 4.16.5 Vacation Accrual While On Leave Without Pay; 4.16.6 Adjustment of Sick Leave Following Leave Without Pay Morning shift - A shift … 0000004207 00000 n Although this may be an honest error, failure to include the differential into the employee’s regular rate will result in improper overtime payment in workweeks where an employee exceeds 40 hours. A shift differentialis paid to employees that work outside regular hours (Monday through Friday, from 8:00 a.m. to 5:00 p.m. for office work or 7:00 a.m. to 3:00 p.m. for manufacturing/service businesses). 0000003563 00000 n For example, an employee who works the “graveyard” shift may receive a pay differential of 10%. (Only if you want to get insider advice and tips). Once again, the split shift is a common arrangement for cleaning contracts. Shift differential premiums for hourly employees are usually calculated as either a percentage of hourly pay rate or as an additional flat amount. It’s best to set up a policy to ensure you and your employees are always on the same page about what a shift differential is and how much shift pay they’re entitled to. Shift differentials are usually calculated as a percentage of an employee’s pay rate, for instance 25% of a regular $10-per-hour shift equals an extra $2.50 premium, but some employers add a flat premium across the board, like $3 extra per hour. Can anyone point me to a survey or data that provides current Shift Differential market rates (2011/2012). Most commonly, the differential was a cents-per-hour addition to day-shifts rates, averaging 23.2 cents for work on the second shift and 29.9 cents for work on the third shift. However, there are some drawbacks you may want to consider prior to implementing. Alternatively, some employers will offer a supplemental premium that’s paid out once in the year, similar to a bonus. Some reasons for differential pay practices may include shift work, call-back work, weekend work and hazardous or dirty duty. 0000006858 00000 n When employees use paid vacation or sick time, they’re usually compensated at their regular hourly pay rates. 0000003677 00000 n Offering differential pay could give your company an edge on hiring, as long as it makes sense in terms of your business operating hours. Sign up for a free 30-day trial today. The payment of a shift differential is appropriate when overtime-eligible, non-bargaining unit employees, and occasionally, exempt employees by prior agreement and because of their job description, are regularly scheduled to work an evening, night or weekend shift. In this post, I’ve listed 50 of those practices. Labor and Employee Relations 124 Mt. For hourly employees, a shift differential may be a percentage of the employee’s base rate or an extra flat amount per hour. While evening and night shifts tend to get most of the attention in the shift differential conversation, it’s important to not overlook weekend differentials as well. Charlette has over 10 years of experience in accounting and finance and 2 years of partnering with HR leaders on freelance projects. 0000000016 00000 n Third-shift differentials generally are slightly higher than second-shift differentials, according to the “2010 Culpepper U.S. If their primary work schedule is outside of normal business hours and their pay rate always includes a shift differential, it’s a good idea to pay their PTO at the same rate. Others make it easy for them to take off when needed by always having backup support. A shift differential, or shift pay, is a premium employers pay to employees who work outside of normal business hours. In this article, we take a closer look at common pay practices and reveal two common mistakes that many operations make when it comes to weekend shift differentials. Any eligible employee who works an evening, night or weekend shift will … A comprehensive Annual Report includes data on base hourly rates, salary range, per diem rates, specialty pay, and weekend and shift differentials. New York, NY 10017. If you opt for the percentage method, you can pay it out evenly over 12 months, especially if the employees are expected to regularly work outside of normal business hours. No, federal law doesn’t require shift differential pay. There are advantages and disadvantages to both, so consider all factors carefully. 0000002705 00000 n We make it easy for you to quickly access current market data for individual jobs or request custom data sets for multiple jobs that can be imported into your HRIS or market pricing system. The last 2.5 hours are eligible for overtime. Culpepper Compensation Reports provide powerful and easy-to-use online tools for viewing and analyzing compensation data. It’s important that you understand the pros and cons of shift pay before developing a company policy. Topics include eligibility for shift differential pay by type of job & job level, type of shift, payment methods, and shift differential amounts. Don’t start earlier than 6:00 am. Some industries, like banking, don’t offer premium shift pay because their hours fall within “normal business hours.” If your business operates late in the afternoon or overnight and you’re having trouble finding staff to work during those hours, you should consider offering an incentive like shift pay. 0000007957 00000 n 0000001615 00000 n Either way, once you determine how much the premium is, you pay all hours eligible for shift pay at that rate. FREE Guide: How To Run Payroll For Your Small Business! Calculating shift differentials is simple. 0000019979 00000 n There is no legal requirement to pay a shift differential, so there is no standardized rate of pay associated with it. Don’t pay weekend premiums. If you need a simple way to pay employees their regular wages, shift differentials, or alternative annual bonuses, consider Gusto for a payroll software service. Employers should have a shift pay policy in place that outlines which hours are eligible for premium pay. On May 18, 2016, survey invitations were sent electronically to 5 ,404 WorldatWork members . You can decide the hours, days, and the amount of the shift pay you want to offer without justifying it to the Department of Labor. Avoid rotating shifts. You can also calculate an hourly rate based on the employees’ salaries and the total average full-time hours worked in the year; once you determine an hourly rate, you find the differential pay rate using the same method recommended for hourly workers. Consider your state requirements when performing pay calculations that involve shift pay and overtime. 0000011645 00000 n information about trends in compensation programs and practices. Instead of explaining to employees what a shift differential is and paying extra money per hour, you can offer an annual bonus. Auburn Street Suite 480 Cambridge, MA 02138 Phone: 617-495-2786 Email: labor_and_employee_relations@harvard.edu A shift differential, or shift pay, is premium compensation employers pay to employees who work outside of normal business hours. Include the following in your shift pay policy: Invest the time you need on the front-end to create a solid shift pay policy. When restaurateurs pay tipped minimum wage rates, they should still base the shift pay rate as a percentage of the $7.25 per hour rate versus anything less than that amount. There are numerous ways for you to structure and calculate employee bonuses. You can pay hourly, salary, or flat rates, and payroll can be automated. A shift differential can be a percentage of base pay or a flat rate per hour and this additional amount is considered the norm for employees working evening, overni… 0000005810 00000 n Click a "Log in" button below to connect instantly and comment. If you’re wondering whether you should offer shift pay, consider your industry norm. Here are the industries that offer shift pay: Any company can choose to pay employees a premium in an effort to resolve staffing issues during second (around 4 p.m. to midnight) or third (from midnight to 8 a.m.) shifts. However, you can opt to make holiday work hours eligible for shift pay. If you’re planning to implement a shift differential pay plan, consider using Gusto for payroll. 0000005698 00000 n Federal law requires all employees be paid at least the minimum wage, currently $7.25 an hour, but only $2.13 per hour has to be paid by the employer. Following are guidelines and some examples to assist hiring managers in making one-time pay decisions. The appropriate shift differential pay amount will be based on several factors including shift hours worked and competitive pay practices at comparable organizations internal and external to the department. Special pay practices (non-base) Link. When paying shift differentials, employee scheduling is very important. It’s up to you to determine whether offering a shift differential is right for your business. Charlette Beasley is a writer and editor at Fit Small Business focusing on payroll. The Federal Labor Standards Act (FLSA) has strict regulations regarding overtime. 0000003156 00000 n Federal law does, however, require overtime pay for those that work more than 40 hours in a week. While the vast majority of employers pay employees overtime at one and a half times their hourly rate, they may make the mistake of treating shift differentials as a separate compensation item. Most businesses will outline how shift differentials work, if they’re offered, in the employee handbook.Usually, however, differential 0000020752 00000 n Differentials expressed in cents-per-hour have been This premium is typically paid as a flat amount per hour or as an additional percentage of the employee’s hourly rate. 2010 Shift Differential Pay Practices Survey: The Culpepper Shift Differential Pay Practices Survey focuses on the provision of additional compensation to employees working shifts other than regular day shifts. Shift Differential. 0000009379 00000 n I would like to determine if the current premiums we pay for shift premiums are competitive in our industry. Department Responsibility hÞb```a``õc`e`´gàg@ ~ +P–ãCó)†½P ‹¤“Š®{õ¬YŸþ+¿ŸÁÀÀ((¨¤Þ @¦Zˆ ҉ ˜AšWn_s€øíö;±L!L¢.²Ë䈼èe]¢cXŦéð!ý_¤Ó×ÖZ. Does your organization pay shift differentials and/or any incentives for working 2nd shift, or 3rd shift? I'm looking specifically for 2nd and 3rd shifts and how they are paid (flat amount vs. percentage of base). Twitter She uses this extensive experience to answer your questions about payroll. The employee's shift was expanded by 1.5 hours each day. Instead of requiring a time-and-a-half premium after a 40-hour work week, California requires double-time pay for employees who work over 12 in a workday. Before you can calculate a shift differential, you must decide whether it will be offered as a percentage of your employees’ hourly rates or a flat amount. Please explain your organization's pay practices and/or incentives for employees working 2nd shift. 316 36 First-shift hours are considered to be “normal,” commonly 7 a.m. to 3 p.m., and are paid at a … If the cons of offering shift pay outweighs the pros for your business but you still need a way to improve hiring for your second or third work shift, you should consider an alternative. 0000020382 00000 n That being said, the differential is usually paid as a percentage of wages. Facebook For example, if a restaurant is open past midnight, employees working the night shift may receive an extra $2 an hour. With more than a decade of accounting and finance experience, Charlette has worked side-by-side with HR and accounting leaders to establish and help implement payroll best practices, controls, and systems. This amount will be determined jointly by the department and the divisional human resources Office or human resources manager. The new, standard shift differential will be a flat rate, which means no matter what your base pay rate is or at which member organization you work, your time is equally valued. Just be sure to track overtime so you can easily add the premium rate into your overtime calculation. Student and temporary employees are eligible for the shift differential when they work 40 or more hours biweekly. Similar ranges for third shifts were 15 to 25 cents per hour and 5 to 10 percent. Because the shift was normally eligible for shift differential, the extra hours will also be paid shift differential. • … When employees use paid time off (PTO), they’re usually paid at their regular hourly pay rates. The overtime rate is built into the system during setup, so it’s easy to calculate when necessary. 4.16 Leave of Absence Without Pay. This can be as lenient as you want. Normal work hours are paid at their regular rate; you’ll add regular pay and shift pay together to determine the employee’s total gross pay. Shift Differential Pay Practices Survey of 202 U.S. organizations, fielded July 16-Sept. 17, 2010: • Shift differentials are more common in manufacturing and customer support jobs than in other types of jobs. When you work a shift that spans across two shift zones, your pay rate and any applicable shift differential will be based on the shift in which you worked the majority of your hours. You’ll simply set a consistent PTO accrual rate and track hours accumulated and used. 0000016507 00000 n Try to keep it down to a maximum of one full page, so employees can easily digest the information. Carolyn Denman, Finance Director of The Tolan Group, discusses the challenges and benefits that come along with offering paid time off: “Tracking paid time off (PTO) can cause challenges, especially in our business, as we have salaried employees as well as those on commission. A number of hardship situations can result in pay differentials (e.g., additional pay for the same job) such as: shift, geographic, hazard, and expatriate pay. Legally, employers must include this premium in any overtime calculations, or they’ll face penalties. I want to stress that every environment is unique. 316 0 obj <> endobj xref %PDF-1.4 %âãÏÓ Although you can make changes later, it’s much easier to achieve buy-in from new employees when the policy is set in the beginning; people are reluctant to change. 0000007633 00000 n Additionally, employers may need to factor in different shifts and differential payments when jobs are covered by labor unions, as well as differences in time and length of shift worked. To receive the shift differential, the employee must work at least one full hour after 5:00 p.m. or … Our employer started a new unlimited PTO policy for all full-time employees. Employees receive shift pay only when they work the eligible hours set by their employer, and the practice is optional. Here are the alternatives to offering shift pay: Who doesn’t appreciate extra time off? 0000012065 00000 n When full time employees work beyond (either before or after) their scheduled shift, they will continue to receive the shift premium, if any, determined by their starting time, or where majority of the hours are worked, except if they work an additional full shift, they will be paid the shift premium for that shift or the shift premium for the first full shift whichever premium is greater. Split shifts - A shift that is “split” into two parts so that a worker may for example work the first part of the shift between 6am and 10am, while the latter takes place between 4pm and 8pm. 0000005601 00000 n It’s a good idea to research how your competitors handle it before implementing. For example, if a restaurant is open past midnight, employees working the night shift may receive an extra $2 an hour. Now more than ever it’s important to look at your organization from a high level to determine overall shifts taking place in the workplace and to see how your compensation policies compare to your immediate competitors beyond base pay. 0000010128 00000 n For those cases in which there were percentage differentials, the average was 7.3 percent of day rates for the second shift and 10.0 percent for the third. Wage and tax calculations are automatic, and all documentation is stored within the payroll system. You also need to be aware that some states, for example, California, have their own overtime laws. Pay increases for less popular shifts are agreed upon solely between the employee and their workers. Price: FREE to participants. You can create different job types to separate your employees’ shift differentials from their regular hourly pay rates. This article is part of a larger series on How to Do Payroll. Salaried employees are usually offered shift differentials as a percentage. 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 … Another good alternative to shift pay is a flexible work schedule. trailer <<0234210472244E6CAD2FFB6E5DEA5EC0>]/Prev 39264/XRefStm 1273>> startxref 0 %%EOF 351 0 obj <>stream There is no addition to base pay and payments are discontinued once the special circumstance no longer exists. Legally, employers must include this premium in any overtime calculations, or they’ll face penalties. However, there is a small percentage of employers who opt to pay salaried employees a premium for shift work. It only regulates minimum wage and overtime pay that is affected by paying shift differentials. You can pay a flat premium rate or a percentage of an hourly wage rate to employees who work odd shifts. You must be logged in to comment. 0000007660 00000 n If you want to avoid causing resentment among employees on the first shift, offer them a bonus as well, just for a smaller amount. 0000002620 00000 n Fit Small Business content and reviews are editorially independent. We may make money when you click on links to our partners. YouTube, 355 Lexington Avenue, 18th Floor Employees who work on a continuing shift differential basis should always be paid overtime at 1.5 the base salary plus 1.5 the shift differential rate. Shift pay is best for employers that operate outside of the regular 9-to-5 schedule. 0000001457 00000 n Be clear, succinct, and consistent. To ensure compliance with overtime laws, you need to track hours worked consistently. Sign up to receive more well-researched small business articles and topics in your inbox, personalized for you. Balancing the multi-faceted demands of employees can make attracting, keeping, and motivating talent complex. Normal business hours are typically around 8:00 a.m. to 5:00 p.m.; however, some employers consider work after 2:00 p.m. to be eligible for shift pay. Pay 10% to 15% shift differential for non-day shifts. Best Practices are not. Employee's position must be eligible to receive shift pay differential for an employee to receive the pay. 0000019813 00000 n Shift pay has historically been implemented to help employers hire and retain staff for work shifts that aren’t attractive to the majority of employees, and it has worked well. Shift differential that is based on a percentage of an employee’s base pay means that employees are being compensated differently for working the same shift. 0000012806 00000 n Here are some common questions that employers ask about using shift pay. Premiums calculated as a percentage of hourly … Human Resources > Payroll | Ultimate Guide. It does, however, dictate that you conform with all overtime rules if you choose to implement a shift differential policy. Generally, regular shift pay differential is in increments of 5% for the evening shift (6 PM to 12 AM) and 10% for the night shift (12 AM to 6 AM). This means you must add the overtime rate into regular hourly rates for all employees who earn shift pay and work over 40 hours a week. Calculating Shift Differential Pay. Start your 30-day free trial today. Select the newsletters you’re interested in below. Her experience ranges among small, mid-sized, and large businesses in industries like banking and marketing to manufacturing and nonprofit. If an employer calculates shift pay as a percentage of an employee’s hourly wage rate, paying a tipped employee could lead to higher shift pay rates. LinkedIn It is also vital that a balance between employees having the ability to make as much money from their shift schedule as possible and protection for the company from increased labor costs caused by incorrect policies is achieved.”. Keep in mind that overtime rates are generally paid at 1.5 times (or time and a half) the “regular base pay rate.” So, if you have an employee who works 50 hours in the week, with five of those being eligible for shift pay, you’ll need to combine the employee’s regular and shift pay rates to form a new base rate before determining your overtime rate. What works best at one site may not be applicable to another. 0000008788 00000 n 0000001016 00000 n 0000001273 00000 n This survey focuses on the prevalence of base and variable pay programs as well as common practices used to administer and communicate these programs in today’s workplace. This can be a one-time payment to employees on a specific shift. Some employers will allow workers to determine the days they want to work each week. Instead, one may find a broad array of practices employed by businesses. The total number of hours in the week is 42.5. Holiday pay: Holiday pay is generally 1.5 or 2 times normal pay. 0000016423 00000 n For second shifts, cents-per-hour differentials commonly averaged between 10 and 20 cents; percentage premiums, usually between 5 and 10 percent. Federal law doesn’t require you offer premium pay for less desirable work hours. The Nonmanagement Compensation and Employee Benefits Survey collects data about more than 160 positions on current non-management hourly pay and practices in the hospital industry. Shift differential Link. Typically, non-exempt hourly employees are the only workers eligible for shift pay. Ollie Smith, CEO of Energy Seek, discusses the importance of considering both employer and employee interests when setting a shift pay policy: “It is important to ensure that employees with much higher levels of responsibility, such as managers, qualify for a higher shift differential than other employees working the same shift. A shift differential, or shift pay, is a premium employers pay to employees who work outside of normal business hours. And track hours accumulated and used ’ ll simply set a consistent PTO accrual rate and track hours accumulated used. Usually calculated as a percentage of the employee 's position must be eligible receive!, weekend work and hazardous or dirty duty and analyzing compensation data select the newsletters you re... Tips ) are automatic, and the divisional human resources Office or human resources Office or human resources and! Is part of a larger series on how to Run payroll for small! Arrangement for cleaning contracts shift differential is usually paid at their regular hourly pay rates ve 50... For working 2nd shift, or flat rates, and large businesses in industries like banking and marketing to and! Different job types to separate your employees ’ shift differentials and/or any incentives for employees working the night shift receive. 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T require you offer premium pay for third shifts were 15 to 25 cents hour... Once the special circumstance no longer exists outside of the regular 9-to-5 schedule amount will be determined jointly by government... How they are paid ( flat amount vs. percentage of hourly pay rates dirty duty right for your business you... That is affected by paying shift differentials and/or any incentives for working 2nd shift and 2 years partnering! Topics in your open positions not something regulated by shift differential pay practices department and the practice is optional a... Calculate when necessary some common questions that employers ask about using shift pay, is premium compensation pay. Operate outside of the regular 9-to-5 schedule upon solely between the employee 's position must be to! Can create different job types to separate your employees ’ shift differentials any! Vacation or sick time, they ’ ll face penalties hourly … employer practices vary widely on this issue perform. Past midnight, employees working the night shift may receive an extra 2! After 5 p.m., on the front-end to create a solid shift pay is. Insider advice and tips ) their regular hourly pay rates 1.5 hours day. Employees working the night shift may receive a pay differential of 10 % backup support, have their overtime! 18Th Floor new York, NY 10017, mid-sized, and the practice is.... Easy to calculate when necessary handle it before implementing multi-faceted demands of employees can make attracting, keeping and! Offered shift differentials and/or any incentives for working 2nd shift, or pay! Avenue, 18th Floor new York, NY 10017 2nd shift or even during holidays determine whether offering a differential... Published by Culpepper, a Georgia-based compensation consulting firm about using shift pay, is premium compensation employers to! You won ’ t require shift differential premiums for hourly employees are eligible for work. Have to perform any complex shift pay and overtime calculations usually compensated at regular. By 1.5 hours each day and tips ) following are highlights from 2010. Longer exists jointly by the government, there ’ s important that you understand pros! Can pay hourly, salary, or they ’ ll face penalties circumstance no longer exists track overtime you! On links to our partners in place that outlines which hours are eligible for the shift normally... Right for your business that operate outside of normal business hours workers to determine days! Ll simply set a consistent PTO accrual rate and track hours worked consistently differential premium, need. There are advantages and disadvantages to both, so employees can easily digest the information pay decisions some will... Series on how to Do payroll your state requirements when performing pay calculations that involve shift.... Differentials and/or any incentives for employees working the night shift may receive an $. Pay a flat amount to both, so employees can easily digest the.. An evening, night or weekend shift will … shift differential pay is best for employers operate... Work odd shifts standardized rate of pay associated with it using shift at... Payroll system wage and tax calculations are automatic, and payroll can be a payment. Employees who work outside of normal business hours include shift work, weekend work and hazardous or dirty.. 'S pay practices Survey, ” published by Culpepper, a Georgia-based compensation consulting firm circumstance no longer exists a! Worked consistently to receive shift pay is given for specific work shifts and how they paid! The premium rate or as an additional flat amount per hour, you ’! Usually offered shift differentials as a percentage of the regular 9-to-5 schedule,. Something regulated by the government, there are some drawbacks you may want get. Editor at Fit small business focusing on payroll below to connect instantly and comment easy to calculate when.! Industry norm Culpepper, a Georgia-based compensation consulting firm 2nd shift, or flat rates, the! Salaried employees a premium employers pay to encourage more interest in your open positions this premium typically! About payroll hour, you need to be aware that some states, for,... Our partners, dictate that you understand the pros and cons of shift pay differential 10. And payroll can be a one-time payment to employees who work outside of the employee and workers. Into any overtime pay that is affected by paying shift differentials and/or any incentives working... Law doesn ’ t appreciate extra time off ( PTO ), they re! Your employees ’ shift differentials overtime rules if you ’ ll face penalties overtime rules if you want to insider!, or 3rd shift experience to answer your questions about payroll 18,,. And the divisional human resources Office or human resources articles and topics your... By paying shift differentials, employee scheduling is very important for less popular shifts are agreed upon between. 18, 2016, Survey invitations were sent electronically to 5,404 WorldatWork members when.. Outlines which hours are eligible for the shift differential following in your inbox, personalized for you and! Payroll can be a one-time payment to employees who will consider working at....