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&rduqo; 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

4 Comments

  1. Ricardo says:

    I worked a shift in which I wasn’t scheduled to work. Does my employer still has to pay me?

    • Diane A says:

      Assuming you’re paid by the hour, of course your employer has to pay you! The law says you must be paid for all hours you work. In addition, if you’re not paid a salary, and the shift put you over 40 hours of work for the week, then the law says you are entitled to time-and-a-half overtime pay. If you ARE paid a salary, it depends on whether the extra shift put you over 40 hours for the week, and whether you’re legally entitled to overtime or not as to whether your employer has to pay you additional money for working the extra shift. If you’re concerned you’re not being paid correctly, you can always check with your state or the Federal Department of Labor, or you can consult with an employment law attorney. There may also be community or legal-aid organizations in your area that can provide help with payroll questions.

  2. Lisa says:

    I have an unsupervised 1099 employee who works office hours at an hourly rate and commission on services rendered. She continues to claim to work hours in the office not completing services outside of business hours (excessive hours). There is no way to prove whether she did or didn’t except there is no documentation to prove she was actually working. As the business is closed and the phones are automatically turned over to night service after hours do we have to pay her?

    She claims these hours to be time spent cleaning and filing. However, the filing has been in the same place for 3 weeks and I just made a trip to that state office and found 3 carloads of trash in one of the offices. Are we obligated or required by law to pay this time?

    • Diane A says:

      First off, I suggest you put in place a procedure for her to formally record the hours she’s actually in the office. If you have an hourly employee with no documentation of the hours they actually spend at work, that’s just asking for trouble. Put in place something that requires her to be physically present in order to clock in and out (i.e. a biometric solution). Then at least you know she is there when she claims to be. Without documentation, if she decides to file a complaint or lawsuit it turns into a situation of your word against hers and which one of you can make a more “credible” case to the auditor or judge. You don’t want to be in that position!

      As to the alleged “work” she’s already done, you probably do have to pay her. But that may depend on the terms of your employment agreement with her, because she’s a 1099 worker (independent contractor) not a standard employee. (Be sure she’s legitimately a 1099 worker, though — there are a lot of folks out there who are misclassified, which is a whole other can of worms!) This is a very good example of a situation where a good experienced employment law attorney could be worth their weight in gold.

      If she’s not accomplishing the duties you’ve assigned, you may have a case for terminating your agreement, if that’s what you want to do. Again, documentation of your expectations versus her performance is crucial.

      The key to everything is documentation. Documentation of the hours she spends in the office. Documentation of the things you expect her to accomplish. Documentation of the results of her work. Without documentation, you’re on very shaky ground. Consult with your employment law attorney to make sure you’ve covered all your bases and that you’re doing everything by the book. Good luck!

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