To control costs, policy at Good Guys Construction Co. requires prior approval of all overtime by the owner or a supervisor. Recently, when a carpenter’s timecard showed overtime hours that hadn’t been approved, the company paid those hours at the employee’s regular pay rate. When the employee protested, Good Guys cited the company policy.
What the Law Says
Federal Wage and Hour regulations require that all employees—unless specifically exempt—must be paid 1.5 times their rate of pay for any hours worked over 40 hours in workweek. There are no exceptions based on prior approval. This can place companies in a difficult situation when trying to control overtime costs.
What You Should Do
Carefully monitor time worked throughout the week and be certain to modify employees’ schedules should they approach having enough hours to qualify for unapproved overtime. Even though overtime rates need to be paid if worked, companies that experience chronic unapproved overtime being worked by their employees should develop a policy that subjects employees to disciplinary action should they work overtime without supervisor approval. These disciplinary actions can include formal written warnings, cuts to future pay, and even termination.
Douglas Delp is founder of The Delp Group, which provides human resources, benefits, insurance, and payroll services to small businesses.