Shift pay · guide
Night shift differential and overtime: is the differential in the overtime rate?
A shift differential is the extra you get an hour for nights, evenings or weekends. This guide shows what federal law says about it, why it belongs in the rate your overtime is figured on, and how that rate is worked out when a week has hours at two rates.
Federal law does not require a differential
The U.S. Department of Labor says extra pay for working night shifts is a matter of agreement between the employer and the employee (or the employee’s representative): the Fair Labor Standards Act (FLSA) does not require extra pay for night work.
What the FLSA does require is overtime: covered, nonexempt workers must be paid not less than time and one-half their regular rate for the hours worked over 40 in a workweek. The question is what that regular rate is when part of the week paid more.
Sources: U.S. Department of Labor, Night Work and Shift Work; U.S. Department of Labor, Fact Sheet #23: Overtime Pay Requirements of the FLSA
When you get a differential, it is in the regular rate
The regular rate includes all pay for employment except the payments the law itself excludes. The federal rule on premium pay names night shift differentials directly: the Act requires including them in the regular rate, whether they take the form of a percent of the base rate or an addition of so many cents per hour (29 CFR 778.207(b)).
A differential is not an overtime premium, so it cannot be counted toward the overtime you are owed: it goes into the regular rate before overtime is computed, and no part of it can be credited toward the overtime pay (29 CFR 778.207(a)).
Sources: 29 CFR 778.207, Other types of contract premium pay distinguished (eCFR); U.S. Department of Labor, Fact Sheet #23: Overtime Pay Requirements of the FLSA; U.S. Department of Labor, Fact Sheet #56A: Overview of the Regular Rate of Pay
Two rates in one week: the weighted average
When you work at two or more rates in one workweek, your regular rate for that week is the weighted average of the rates: your total earnings at all of them, divided by the total hours worked (29 CFR 778.115). Each hour over 40 then adds half of that regular rate on top of the straight-time pay you already got for it.
So the steps are: add the pay of the hours at the base rate and the hours at the shift rate, divide by all the hours, and pay half of the result again for every hour over 40.
Sources: 29 CFR 778.115, Employees working at two or more rates (eCFR); U.S. Department of Labor, Fact Sheet #23: Overtime Pay Requirements of the FLSA
Worked examples
40 hours, 10% differential: at $20 an hour with 10% more at night, the shift rate is $22.00. 24 hours at $20 and 16 at $22.00 are $832.00 for 40 hours. The regular rate is $20.80, there are 0 hours over 40, so the overtime premium is $0.00 and the week pays $832.00.
48 hours, 10% differential: 24 hours at $20 and 24 at $22.00 are $1,008.00 for 48 hours. The regular rate is $1,008.00 / 48 = $21.00. Each of the 8 hours over 40 adds half of it, an overtime premium of $84.00, and the week pays $1,092.00.
If that differential were left out, the regular rate would be the base $20.00 and the 8 hours over 40 would add $80.00: $4.00 less than the law requires.
$1.50 an hour more: at $18 an hour plus $1.50 on the night shift, the shift rate is $19.50. 30 hours at $18 and 15 at $19.50 are $832.50 for 45 hours. The regular rate is $18.50, the 5 hours over 40 add an overtime premium of $46.25, and the week pays $878.75.
These figures come from the shift differential calculator; enter your own rate, differential and hours there to see your week.
Sources: 29 CFR 778.115, Employees working at two or more rates (eCFR); 29 CFR 778.207, Other types of contract premium pay distinguished (eCFR)
State rules
States can add to the federal rules. California’s Labor Commissioner says the regular rate of an hourly worker includes shift differentials, and that with two or more rates in a week it is the weighted average: the earnings of the week divided by all the hours worked, overtime hours included. In its example, 32 hours at $11.00 and 10 hours at $9.00 give a regular rate of $10.52.
California also has daily overtime, which this guide and the shift differential calculator do not cover: for hours over 8 in a day, use the overtime calculator. Other states have their own rules; check your state’s labor department.
A guide to what these rules and agencies publish, not legal advice. For your own case, check your state’s labor department. Checked against the eCFR, Department of Labor and California Labor Commissioner pages on November 5, 2026.
Open the shift differential calculatorHow overtime is calculatedHow to read your pay stubShift differentials at common rates
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