A “Timely” Reminder About Overtime

I mentioned previously how important it is to train your supervisors on all aspects of employment law. Their actions (or inactions) in a variety of workforce management areas can open the entire company up to legal risk. Here’s another situation where proper training on the rules is crucial: what to do when an employee works unauthorized overtime.

The Situation

flickr-herr-kaczmarek

Imagine one of your overtime-eligible employees is working hard on a project. For whatever reason, the supervisor is unavailable. In order to meet the deadline, the employee decides on her own to put in some overtime. When the supervisor returns, the employee reports the extra time worked and asks for approval of the overtime.

So what happens next? I can think of three general outcomes:

  • The supervisor compliments the employee on her dedication and says he will retroactively approve the overtime. However, he also reminds the employee company policy requires advance approval for overtime work and goes over the procedure to follow if the supervisor isn’t available. The employee apologies and promises to follow company policy in the future. She is paid for the time she worked, including the overtime.
  • The supervisor reminds the employee of the company policy requiring advance approval for overtime work and advises the employee in the future to get approval before incurring overtime. The employee decides she won’t put in for the overtime pay after all, apologizes and promises to follow company policy in the future.
  • The supervisor reminds the employee of the company policy requiring advance approval for overtime work, and refuses to approve the overtime because it was “unauthorized.”

The thing is, only one of these three outcomes is legal.

If They Work It, You Probably Have To Pay It

The Fair Labor Standards Act (FLSA) says employees are entitled to be paid for any time they are “suffered or permitted“ to work. In this case, the employee concluded she couldn’t complete her assignment within normal work hours, so she decided to put in the extra work. The company is willing to accept the results of her work, so it would be hard to argue the employee wasn’t “suffered or permitted” to work the extra time.

What this means: in almost all cases, you still have to pay employees for all the time they work — including overtime — regardless of whether the overtime was “authorized.” No matter what your employee handbook might say.

Now, just because the law says you have to pay them for the overtime, this doesn’t mean you can’t also discipline them for failing to get advance approval for the time. This discipline should conform to your general company disciplinary policies. For a first offense, a simple talking-to may be all that’s required. For repeat offenders, progressive measures, up to and including termination, may be necessary.

Supervisor Education Is Key

But it all hinges on supervisor education. Your supervisors are your front-line defense, both to make sure your employees are properly paid for the hours they work, and to make sure infractions of company policy are dealt with properly and legally.

A few hints:

  • Make sure supervisors are aware of both company policy regarding overtime and the laws about overtime pay. They need to understand that employees must be paid for all time they’ve worked, regardless of whether it was authorized in advance or not.
  • Review your supervisor evaluation process to make sure you aren’t inadvertently incentivizing supervisors to force their employees to work “off the clock” to improve their department’s apparent performance.
  • Hold supervisors responsible for regularly auditing employee time records to make sure workers are reporting all their time.
  • Audit employee time records yourself, looking for signs of abuse such as frequent manual edits by the supervisor or unrealistically low hours.

Absolutely, I know it’s frustrating to pay overtime for work you didn’t approve! By denying the overtime pay, you may save a few dollars in the short run, but you’ll almost certainly end up paying far more in the end, in the form of fines, penalties and liquidated damages.

So, what about your company? How do you handle it when workers put in unauthorized overtime?

Photo credit: Herr Kaczmarek

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