The perils of overtime are on every employer’s mind right now, due to proposed changes in the Fair Labor Standards Act (FLSA). But while those changes will apply to an expanded group of employees, managing overtime is already a challenge for many employers.
Did you know that unpaid overtime is the most common wage and hour violation? 90%—yes 90%!—of back wage settlements resulting from Department of Labor investigations included overtime violations, according to NERA Economic Consulting’s 2015 report, which tracked DOL investigations for the last eight years.[i]
While the FLSA changes will present new challenges, proactive employers can curb overtime violations now by following these very basic guidelines.
While the FLSA changes will present new challenges, proactive employers can curb overtime violations now by following these very basic guidelines.- Know Your Definition(s) of Overtime
The very definition of “overtime” varies. The FLSA mandates that overtime be paid to eligible employees for hours worked beyond 40 per week at a rate of 1.5x their straight hourly rate. However, some states—not to mention union agreements—have stricter requirements. Does your time tracking system factor them all in?
- Make Sure You’re Tracking Overtime Hours Correctly
Automated time and attendance systems are more accurate than manual timesheets when it comes to tracking hours. Because of their reporting capabilities, they also make it easier to dispute or verify overtime claims. Even so, employees and managers need to be trained to use their systems correctly.
For example, when employees fail to punch out at the day’s end, managers need to address and close out those punches promptly. Similarly, managers need to know and follow the rules for changing employee time cards.
- Make Sure You’re Paying Overtime Correctly
Calculating overtime rates isn’t always straightforward. One problem area is correctly calculating blended overtime pay for employees with multiple pay rates. Doing this manually can be tricky, but a robust automated time tracking system will accurately perform this calculation for you.
- Use Technology to Manage Overtime Hours
Employee overtime isn’t just a compliance risk, it’s an expense. Employers can limit both risks and costs by proactively managing overtime activity. If your time tracking system produces overtime reports, use them. They can help you identify where and when unplanned overtime is occurring.
For example, is it happening on certain worksites or shifts? Training managers to schedule their employees more effectively can help minimize overtime hours, curbing your exposure.
In short, the way employers manage overtime is no small thing, and it’s about to become more important. Now’s the time to make sure that you are getting it right.
Ask EPAY for Help Avoiding the Overtime Trap
EPAY’s cloud-based time tracking system can help you manage the risks and costs associated with overtime. It accurately calculates work time, puts tight control on time changes, and gives you instant visibility into overtime activity, thanks to real-time flagging and reports. Our scheduling program can help you curb unplanned overtime. In addition, managers can choose to be notified in real-time via text or email when an employee approaches overtime. Contact us.
[i] http://www.nera.com/content/dam/nera/publications/2015/PUB_Wage_and_Hour_Settlements_0715.pdf