Discover how to calculate overtime pay accurately and fairly. Learn legal aspects, common errors, and special considerations in overtime calculations.
Unauthorized Overtime: Does a Company Have to Pay?
If managers must pre-approve overtime but an employee works overtime without permission, does the company have to pay for the unauthorized overtime wages?
Joe, a nonexempt construction worker, was laying tile for a commercial building when his manager got an emergency phone call from home. In a rush, his manager told Joe to finish up what he was working on by 4pm, then he left the site in a hurry.
Joe continued working until he finished the job, clocking out just past 7pm. When his manager saw Joe’s timecard was up to 43 hours for the week, he was furious and told Joe he wouldn’t be paid for the unauthorized overtime, per company policy.
Can a company legally withhold pay for unauthorized overtime?
No. Per the FLSA, nonexempt employees must be paid for time and a half when they are “suffered or permitted” to work more than 40 hours in a workweek (8 hours a day in some states). While the manager didn’t approve of Joe working overtime, it would be difficult to prove he wasn’t “permitted” to work and could lead to legal repercussions for the company if they didn’t pay.
What recourse can a company take for unauthorized overtime?
Before considering any recourse for an employee working unauthorized overtime, first be sure you have a company policy that says overtime must be pre-approved. Also verify that the employee has signed the employee handbook acknowledging the policy.
Next, find out if this is the first time anyone in the company has worked overtime without getting pre-approval. If it’s a first offense, be aware that you’re setting a precedent for future infractions. Be sensitive to the employee’s hard work, remind them of the policy, and give a verbal warning. Inform the employee that future violations will lead to disciplinary action, per company policy.
If you discover there has been a previous incident of an overtime violation, you’ll need to follow the same disciplinary action from that situation to avoid any appearance of discrimination. (“Why did this employee only get a verbal warning but I got a written warning when I did it last year?”)
How do I prevent unauthorized overtime?
The best way to avoid an unauthorized overtime infraction is to have managers remind employees about the need to have overtime pre-approved. This could be a verbal reminder, an email, something shared in the company chatroom, hung next to the labor law posters, and so on.
Managers should also be trained on wage and hour laws to understand that employees must be paid for any time worked. However, they cannot make employees clock out and still perform job duties, even if it’s just cleaning up afterwards or responding to work-related emails.
Also keep in mind that you can’t have a policy that prohibits overtime while expecting employees to get their work done in an unreasonable amount of time. This may lead to cut corners or potential safety risks for employees rushing to get things done too quickly.
Contact us to learn more about Unauthorized Overtime
For more information about this or any other HR-related question, please contact your certified HR expert. Not a current Stratus HR client? Book a free consultation and our team will contact you shortly.