Overtime wages add significant expense to your work force budget. If your employees are claiming excessive overtime, it's time to remind employees how unauthorized and unnecessary overtime affects the organization's continued profitability and success. Employment laws concerning overtime include the Fair Labor Standards Act and state versions of the FLSA; the U.S. Department of Labor, Wage and Hour Division enforces the Fair Labor Standards Act. Ways to curb overtime include revising current policies or implementing new policies, as well as reviewing wage rates to determine how competitive your wages are compared with similar businesses.
Instructions
1. Study the Fair Labor Standards Act and state and local laws to understand provisions concerning payment for overtime. Federal law requires employers to compensate employees for overtime; however, employers can minimize their liability for excessive overtime claims through implementing and enforcing a policy that prohibits unauthorized overtime.
2. Read your employee handbook and workplace policies to ensure your overtime policy is in writing. Enforcing workplace policies is much simpler when you distribute a written policy and obtain a signed acknowledgment that indicates employees received and understand the policy. If your handbook already contains a clear and well-constructed overtime policy, schedule a brief refresher training about the company's overtime policy.
3. Conduct an audit of employment files and prepare a list of employees whose files indicate they have not received the handbook or policy. Provide those employees with a copy of the handbook and overtime policy and obtain a signed acknowledgment. If there are just a few employees who are unaware of company policies, schedule a meeting to discuss the employee handbook and workplace policies.
4. Revise your company's employee handbook if the current version does not contain a statement on compensation for overtime worked. Your policy should explain the difference between authorized and unauthorized overtime, as well as the process for obtaining approval for overtime hours. In addition, the policy should address the consequences for violating the company's policy on overtime. Consequences can range from a written warning for the first violation to more severe disciplinary action for repeated violations.
5. Discuss the overtime policy with your company's lawyer or in-house legal counsel to ensure your written policy on unauthorized overtime is consistent with the Fair Labor Standards Act and state government regulations concerning payment of overtime. Employers that have work sites in different states or jurisdictions must ensure their policies are consistent with each state's laws.
6. Provide training for supervisors and managers on determine when overtime is necessary, request and approve overtime, and what to do when they encounter employee overtime violations. Training should also include performance-related coaching techniques for employees who repeatedly violate company policies and conduct disciplinary meetings concerning overtime violations. Schedule follow-up meetings with supervisors and managers to ensure effectiveness of your leadership training as well as any obstacles they encounter while enforcing the overtime policy.
7. Conduct research pertaining to wages and compensation for your industry. Consider the possibility that widespread claims for unauthorized overtime are signals that your wage rates aren't competitive. Compare your company's wages with those of other businesses to determine if your employees are compensated competitively. If you discover your company's pay rates are below industry standard, be prepared to re-evaluate and possibly restructure your compensation.
