With all the news about the new Overtime Rule, many business owners are thinking more about overtime than ever. For some, it may even be the first time.

Even while the new rule is currently suspended as the courts decide its constitutionality, it’s important for business owners to ensure they are fully compliant with existing and future FLSA laws regarding overtime. One crucial step is ensuring you have a clear policy detailing when overtime is and isn’t authorized.

An unauthorized overtime policy could save your company from a massive headache down the line.

You’re Required to Pay Unauthorized Overtime

First, let us dispel a common myth about unauthorized overtime: Businesses are still required to pay their employees for overtime, even if the company didn’t explicitly allow the employee to work the extra hours.

Title 29’s §785.11 makes it clear that “[w]ork not requested but suffered or permitted is work time,” meaning any work done for the company is considered work time, whether the employee is expressly approved to work overtime or not. Therefore, it is the company’s responsibility to ensure that employees are not working additional unauthorized hours.

What Can Companies Do to Prevent Overtime?

While companies will almost always have to pay overtime wages when employees work more than 40 hours, there are no regulations prohibiting employers from establishing an unauthorized overtime policy and disciplining employees who don’t comply with that policy.

This discipline should be consistent with your existing company policies, which means you should:

  • Make sure employees are aware of the policy – Everyone on your staff needs to understand the policy. Post the policy in your office and make it a part of the employee handbook. Incorporate it into your new hire trainings and regularly remind employees about the company’s overtime approval process.
  • Use progressive discipline measures – One-off offenses, especially accidental, should be met with a suitable wrist-slap—usually a verbal warning and a refresher on the policy will suffice. For repeat offenders, cutting hours and, eventually, termination may be necessary.
  • Ensure employees comply with the policy – Don’t write a policy and think you’re done. You need to implement a system to regularly ensure your employees are adhering to the unauthorized overtime policy. Your managers and supervisors should also be trained to understand the complexities of overtime law and regulations and know how to enforce the policy.

How to Write an Unauthorized Overtime Policy

When writing your overtime policy, keep in mind that the policy itself will not protect you from legal ramifications. Instead, gear the policy toward ensuring your employees fully understand what is and is not allowed. Outline a clear approval process for when overtime is necessary and establish a consistent discipline procedure.

Here’s a sample overtime policy you can use to get started:

All overtime must be approved by your manager/supervisor prior to being worked. When overtime is approved, it must be logged accurately in your time sheet. {Company Name} has sole discretion to decide when employees are allowed to work additional hours. Failure to comply with this policy will result in disciplinary action starting with a verbal warning, and may eventually result in termination.

Ensure You’re Compliant with FLSA Regulations

Whether you have an overtime policy or not, it is vital that you keep accurate payroll records so you can protect yourself if you’re ever faced with an FLSA lawsuit. Though time tracking can take many forms, we recommend using cloud-based time tracking that provides flexible options for your workforce to clock in and out as well as powerful reports to help you keep tabs on overtime.