Shift Differentials Must be Included in Calculated Overtime

April 4, 2006 ( - The US District Court for the Southern District of Iowa has ruled that an employer must include the shift differential it regularly pays employees who work second or third shift in the regular rate used to calculate overtime pay.

In addition, a sixth day premium the employer usually paid for employees’ sixth day worked – which usually fell on a Saturday – does not have to be included in the regular rate for overtime calculations, according to the opinion.

In Bell vs. Iowa Turkey Growers Cooperative, the company agreed it had shorted employees in overtime calculations the 20 cents per hour and 30 cents per hour shift differentials it paid to employees for regular hours worked during second and third shifts, up to the point it realized it was in violation of the Fair Labor Standards Act (FLSA).   At issue was what credits, if any, the employer should be given when calculating payments to employees to remedy the mistake.

The plaintiffs argued that no credit should be given for overtime the company did pay since the fact that the shift differentials were not included meant the pay was less than the required time and a half rate in the first place.   The court disagreed, and concluded the overtime the company already paid at the incorrect rate as well as the sixth day premiums it had previously paid should be credited against overtime pay still owed.

The opinion is here .


Department of Labor information regarding the FLSA and pay requirements can be accessed here .