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Overtime authorization policy for non-exempt employees saves money

Poor planning and abuse often result in unnecessary overtime. While recent research shows employees may not have more incidents if they work “moderate” overtime (48 – 59 hours per week), they may become more fatigued and less productive. Moreover, overtime represents a significant cost to many companies.

Employers should look at the Wage and Hour Module and be sure that employees are properly classified as exempt versus non-exempt and be sure that proper records are maintained so that overtime is clearly delineated from base pay. A written policy governing overtime for non-exempt employees, including an overtime authorization form should be distributed to employees and conspicuously posted. It is incumbent on employers to watch out for employees trying to enhance their pay with unnecessary overtime. Requiring a signed approval from a supervisor or company officer will help curb the abuse of overtime as well as identify clients and customers that continually make unrealistic time demands.

Key elements to the policy should include:
1. All overtime must be approved in advance by submitting an overtime authorization form. For a sample of this form, contact us.

2. Statement regarding who is eligible for overtime

3. Explanation of how overtime is calculated

4. Statement regarding company’s understanding of personal obligations and desire to provide advanced notice, when possible

5. Statement regarding consequences if employee refuses to work overtime

6. Define compensation terms if your employees participate in company- sponsored community-relation projects

7. Be sure that your policy is in compliance with all state and federal laws as well as collective bargaining agreements