Do You Have to Pay Employees for Unapproved Overtime?

Many employers simply outline in the employee handbook that unauthorized overtime is not allowed.

The stipulation might read something like this: We do not pay for unauthorized overtime. Approval must be obtained prior to starting any work over 40 hours. If overtime is not approved, it is not our responsibility to pay time and a half.

But watch out if you have a rule like this in your employee handbook! Just because it’s in the book doesn’t mean it’s valid and you probably still owe the employee for the time they worked.

(If you need an overtime calculator, try our free tool.)

Employers are rightfully frustrated when employees work longer than they’re needed. But no matter how much an employer dislikes it, in-house policies don’t trump the law and the law says that if an employer knows or has reason to believe that an employee is working, that employee must be paid.

What the Law Says

“Work not requested but suffered or permitted is work time. For example, an employee may voluntarily continue to work at the end of the shift. He may be a pieceworker, he may desire to finish an assigned task or he may wish to correct errors, paste work tickets, prepare time reports or other records. The reason is immaterial. The employer knows or has reason to believe that he is continuing to work and the time is working time.” – §785.11 of Electronic Code of Federal Regulations

This rule goes for time employees work away from the office as well. If employers have reason to believe that employees are working extra time from home, even though it is not authorized, they have to be paid for it.

“The rule is also applicable to work performed away from the premises or the job site, or even at home. If the employer knows or has reason to believe that the work is being performed, he must count the time as hours worked.” – §785.12

It is the job of management to see to it that employees are sent home when their shifts are over. If the behavior continues, employers should discipline the employee.

“In all such cases it is the duty of the management to exercise its control and see that the work is not performed if it does not want it to be performed. It cannot sit back and accept the benefits without compensating for them. The mere promulgation of a rule against such work is not enough. Management has the power to enforce the rule and must make every effort to do so.” – §785.13

Acceptable Discipline

Sometimes, an unspoken rule develops around employees who work unauthorized overtime. After a while, they may be almost expected to put in extra hours for little compensation. This is the type of abuse that the laws are trying to protect against.

For workers that routinely disobey management and intentionally or unintentionally accrue overtime, management can take action in the form of legal disciplinary methods such as:

• Disciplinary action letters
• Reduction in hours down to part time
• Demotion
• Dismissal

Written Warnings

A written warning may be given to the employee several times before the choice is made to release the employee from service. A written warning may look something like this:

We appreciate your assiduous working habits for our company. However, staying late beyond 40 hours in a week (or 8 hours in one day in California) are not allowed at our company without prior approval. Overtime pay is expensive and must fall within the budget. Therefore, we require advance written approval, obtained from management prior to working overtime. If you work overtime and fail to acquire prior approval, we have to take disciplinary measures, such as a severe reduction in your working hours, loss of responsibility, and even dismissal if it continues.

Training in Company Policy

Make sure that employees are properly trained in procedures for requesting overtime. If they don’t know they are supposed to get prior approval or they don’t know how, then it’s hardly their fault if they work overtime.

The above letter might be a little harsh for an employee who wasn’t already familiar with the rules. Be sure employees have proper training in company policy before giving written warnings.

Make Overtime Tracking Easy

The safest thing to do with overtime is to use a time tracking service in which you setup your overtime rules and then pay the calculated overtime. Employees can write notes in their time entries in Timesheets.com so that managers can understand what the overtime was for and then, if it’s not valid, they can follow up with discipline.

 

Let Timesheets.com help you stay compliant!