Optically heterodyned laser interferometry, as applied to measuring linear displacements, requires different optical frequencies to be encoded onto unique polarization states. To eliminate non-linear contributions to the interferometer signal, the frequency difference must be introduced after beam splitting and the interfering beams must be recombined via spatially separated paths. The polarization jitter of the frequency-shifted beams still originates a noise in the beat-signal phase. A formula is given expressing the noise amplitude in terms of the illuminating beam's extinction ratio. (C) 2013 Optical Society of America