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Managing Employee Overtime

Written by Ken Gaebler
Published: 10/16/2013

Overtime can bleed cash from your company's bottom line -- especially if you aren't properly monitoring and managing the extra hours your employees are logging in the workplace.

Overtime is sometimes unavoidable in small business work environments. By authorizing employees to put in a few extra hours each week or during seasonal upswings, you can minimize the need to recruit and train additional part-time or full-time staff.

Employee Overtime Rules and Regulations

From your workers' perspective, the opportunity to work overtime hours can be a welcome perk. The higher hourly wage for overtime is attractive and the extra hours allow workers to earn a nice bump in their weekly paychecks.

But what happens when employees are in the habit of working unauthorized overtime hours?

That's a question that Alison Green tackled in a recent Business Journals article. The scenario that prompted the report was one that most small business owners can appreciate. A new supervisor indicated that he was struggling to manage an older, senior employee who had a habit of arriving early, leaving late and accumulating significant amounts of unauthorized overtime each week.

Green's response was straightforward -- the supervisor should simply call the employee on the unauthorized overtime, telling him to revert to a normal work schedule and requiring the employee to get permission before working overtime hours. If the employee continues to take unauthorized overtime, the supervisor should apply normal disciplinary procedures.

Green's advice makes a lot of sense. But it also draws attention to several issues that small business owners need to address in order to properly manage employees and avoid the risk of overtime overload.

For starters, small business employers need to create scheduling processes that align staffing with work requirements and production schedules. If you find yourself paying overtime when employees are sitting idle at various times throughout the week, it's likely that your scheduling skills are falling short and you're unnecessarily paying overtime wages.

It's also important to create a documented policy regarding the use and authorization of overtime hours. By clearly communicating your policy to all employees, you can reduce incidents of unauthorized overtime and create a foundation for disciplinary actions if employees refuse to adhere to policy guidelines.

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