What is overtime?

Overtime refers to the extra hours that employees work beyond their regular schedule. 

In the U.S., employers must pay non-exempt employees a minimum of time and a half for each extra hour they work past forty hours a week. U.K. law takes a different approach, ruling that employers do not have to pay employees for overtime. However, U.K. employers must follow the employment contract and provide an average compensation that meets the National Minimum Wage standards.   

Why should HR leaders care about overtime?

Overtime laws and company overtime policy can contribute to:

  • Retention
  • Productivity
  • Morale

No employer wants to get tangled in a lawsuit due to unethical treatment of employees–adhering to overtime laws can help companies stay clear of the law and maintain a good name. Moreover, ethical conduct in line with the law illustrates a company’s goodwill towards its employees. Receiving fair compensation for overtime can prevent personnel from feeling under-appreciated while boosting their overall motivation. 

What can HR leaders do to successfully incorporate overtime? 

To maintain a positive employee experience and protect the organization’s standing, HR leaders should:

  • Know the laws. U.S. overtime laws are highly complex so it’s advisable to consult an employment law specialist. In the past, only non-exempt employees could qualify for overtime pay. However, in January 2020, exempt employees who earn less than $684 a week became eligible for overtime pay as well. To make things more complicated, while most states follow federal law regarding the overtime threshold, some states, such as California, New York, and Nevada, have implemented stricter regulations that require employers to compensate employees more generously than the FLSA does. 
  • Align decision-making with the budget. HR leaders and finance should evaluate non-exempt employee salaries. They must analyze whether it’s worth it to pay workers overtime or to raise their salaries beyond the overtime threshold. Currently, employees who earn more than $35,568 a year are not eligible to receive overtime pay. 
  • Inform employees. Employees should understand the regulations regarding overtime before they ever put in overtime hours. Including the overtime policy in the employee handbook and reviewing it during onboarding can ensure employees know their rights and obligations.
  • Define the overtime policy in the contract. A company overtime policy is essential. In the U.K., employees only have to work overtime if the contract states they have to. Clear guidelines ensure that each party can be held accountable for meeting expectations. Managers and employees should communicate before an overtime shift, and personnel should seek approval in advance from managers if they want to work overtime.  

How can implementing overtime improve company culture?

A transparent overtime policy and adherence to government laws can promote ethical overtime compensation. To build trust and a healthy employer-employee relationship, companies must uphold their side of the business relationship and act with integrity. In the long run, following the overtime guidelines can build a company culture that prioritizes just behavior and fair treatment of employees.