Overtime Policy Guidance 

The following is a list of tips that you should consider when setting up your overtime policy.

• Consider staggering work periods in order to avoid overtime compensation otherwise required by the federal wage and hours law (FLSA). The FLSA does not prohibit staggered work periods. For example, weekly shifts can begin in one workweek and end in the following one so that the hours worked in excess of the statutory straight-time workweek fall in the following week, thereby taking them out of the overtime category for the first week.
• Communicate your staggered workweek. If you are going to adjust overtime pay to take advantage of the offsets the law provides, make that very clear in your policy and routinely communicate that information. Employees will expect time and one-half pay for all hours over 40. Unless the perception is addressed, employees may challenge the practice unnecessarily as well as feel a lack of candor on the part of their employer.
• Don’t treat overtime as a privilege. Your policy should stress that overtime is not a benefit it is only to be authorized when business demands it. In no instance should overtime be authorized solely at the request of the employee or awarded as a privilege.
• Don’t be casual about unreported time. Prohibit in writing and enforce actively a prohibition against casual work time and unreported time. Pay for all time and discipline abusers immediately after the fact.
• Don’t unintentionally support unreported time. Through management development and supervisory training, aim to dispel the belief that the good employee is the one who comes in a little early or stays a little late just to help out and does not report the time.
• Have a clear policy on mandatory overtime. If overtime is to be mandatory when requested, state that fact throughout the hiring process and include a statement to be signed by the employee acknowledging an understanding of the company policy regarding mandatory overtime. Even with such a policy, there may be occasions where certain mitigating circumstances, such as illness or death in the employee s immediate family, can and should be exceptions. Document all exceptions to policy.
• Don’t fail to include on-call pay in overtime calculations. Pay for time during which an employee holds himself ready for call to work must be included in the regular-rate computation.
• Don’t average hours worked in two or more weeks. Each workweek must be treated as a separate unit in computing pay.
• Do not negotiate side agreements with employees to avoid paying overtime. Employees cannot waive their rights to overtime compensation granted them by the federal law, except where the government supervises the voluntary payment of wages due or sues on behalf of the employees. Employees cannot agree that their overtime hours may be paid at a lower rate. Agreements to kick back overtime pay and agreements to conceal overtime hours are invalid. Even though employees have agreed to such arrangements, they can still recover the overtime pay specified in the FLSA, possibly by suing you at some point in the future.

Reprinted with permission. © CCH