Shift differentials are additional pay premiums given to hourly employees in order to compensate them for work hours that fall within a designated time window usually outside the regular hours, such as a "second" or "third" shift. Shift differentials are typically paid as a premium in addition to the nonexempt employee's hourly rate for the entire period that he/she is working on that particular shift. Differential pay is most commonly used when the shift being worked is considered to represent a hardship, or if competing companies offer similar compensation.

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