Some of you may remember that we posted a blog a few months ago that talked about a confusing aspect of California’s Prevailing Wage Overtime pay rules –  and in that post we told you that there would be some other fun examples of why being a prevailing wage contractor can be so challenging! Well, here you go!

What is Shift Differential Pay?

Shift differential pay is a predetermined wage that must be paid to the employees when the employee is required to work a shift outside of normal working hours. Or, more specifically, as stated in a March 4, 2002 DIR Importance Notice on the subject of Shift Differential Pay, “When a worker is required to work a regular shift, he/she must be paid the applicable craft rate from the Director’s General Prevailing Wage Determinations for the construction activity he/she is performing. However, when a worker is required to work a shift outside of normal working hours, he/she must be paid the shift differential pay according to the shift he/she is working.”

How Does Shift Differential Pay Affect Prevailing Wage Contractors?

Since normal working hours vary by county and trade, there are many ways this could work.

Here’s one example: While the company’s normal working hours may be from 7:00 to 3:00, the wage determination might indicate that Shift 1 is from 6:00 to 2:00. That means even though the employee is working a “regular” shift in terms of the number of hours worked, the one hour the employee works from 2:00 to 3:00 (based upon the wage determination) means he must be paid Shift 2 wages for that last hour.

Another scenario where shift differential pay comes into play is when a contractor is working on a project that requires them to: a) start work in the evening (such as with highway work), or b) work 24-hour shifts.  Why? Because different shifts may have different rates of pay. As with the above example, the start time of the employee’s shift may influence whether they are paid Shift 2 or Shift 3 wages.

Because it is the prevailing wage contractor’s responsibility to pay the appropriate wage, the only way to know for sure whether you’re going to be affected by shift differential pay rates is to consult the wage determination and the supporting documents to determine the start times of each of the shifts and the wages for each shift. Conveniently, however, the Important Notice goes on to state that not all crafts have shift differential pay requirements. When in doubt, pick up the phone and call Contractors Prevailing Wage for help.

**To confirm our interpretation of this important notice, we spoke with a contact at the DIR about how THEY would audit such a scenario. They agreed that the above examples were accurate.