Managing Overtime: 9 Common Mistakes HR Must Avoid

How to rectify common workforce management issues

By Brett Farmiloe, Terkel.io

From neglecting the right of an employee to not assigning clear work schedules, here are nine answers to the questions, "What are mistakes that HR can make when managing employee overtime and how can this be rectified?"

● Failing to Negotiate Company Protocol

● Overlooking the Impact of Overtime on Employee Burnout

● Misclassifying Employees

● Not Ensuring the Overtime Process Is Vetted

● Misunderstanding Local Overtime Laws

● Lacking a Proper Time-tracking System

● Substituting Overtime Pay with Compensatory Pay

● Misusing the Fluctuating Workweek Method

● Paying Remote Employees for Unauthorized Overtime

Failing to Negotiate Company Protocol

When employees are working overtime, even if this isn't the standard practice at the company and has no mention in company rules, they are owed this extra pay. And when HR neglects this right of an employee and follows company protocol instead, it's a grave error indeed.

An HR department is in place to oversee these transitions that take place in a work environment and negotiate changes accordingly. It is their job to weigh the pros and cons and find a balance between keeping employees happy that they're working at an organization where they're not taken for granted and the management is satisfied that their resources are being managed optimally.

So when changes such as the need for overtime occur, it is the responsibility of HR to negotiate on behalf of these employees and buy the additional resources they need from management.

Riley Beam, Managing Attorney, Douglas R. Beam, P.A.

Overlooking the Impact of Overtime on Employee Burnout

This error can cause decreased productivity, increased absenteeism, and higher staff turnover. To correct this mistake, I believe HR can develop rules and processes that consider the impact of overtime on employee well-being.

HR can limit the amount of overtime required of employees, offer time off in place of overtime compensation, and encourage employees to take breaks and rest while working overtime. HR can also provide employees with information and support to help them manage stress and avoid burnout.

Misclassifying Employees

Failing to classify employees properly is one mistake HR can make when managing their overtime. Misclassifying workers as exempt or non-exempt can cause errors in calculating pay for extra time.

Exempt employees are typically salaried and not entitled to overtime pay, while non-exempt employees are entitled to overtime pay for any hours worked beyond a certain threshold.

To rectify this mistake, HR should:

1. Ensure employees are correctly classified based on job duties and responsibilities. This may involve reviewing job descriptions and conducting a job analysis to determine the classification.

Edward Mellett, Co-founder, Wikijob

Misunderstanding Local Overtime Laws

One mistake HR leaders can make when managing employee overtime is failing to research the specific laws in their industry. For example, some states require different amounts of compensation for double time compared to federal law, and not budgeting for what local laws demand can leave businesses exposed financially.

Carefully review relevant statutes to rectify this issue and partner with an external agency or legal authority with expertise in these areas if need be. Knowing and abiding by applicable regulations is essential with appropriately rewarding staff members who put in extra hours.

Grace He, People and Culture Director, teambuilding.com

2. Verify that regular reviews and updates of employee classifications are accurate and up-todate.

HR should stay up-to-date with all relevant labor laws and regulations related to employee classifications to ensure compliance.

Peter Bryla, Community Manager, ResumeLab

Lacking a Proper Time-tracking System

This is basic, but it's still surprising the number of firms that cannot do this—failing to have a proper system in place to track any employee overtime worked.

This can lead to several issues, such as paying incorrect overtime wages, violating labor laws and regulations, and damaging employee morale and trust. It can also lead to unnecessary legal disputes and financial penalties for the organization.

To avoid this mistake, HR professionals should implement a comprehensive overtime tracking system that accurately records and reports employee hours worked. They must communicate overtime policies and procedures to all employees and comply with any applicable labor laws and regulations.

Substituting Overtime Pay with Compensatory Pay

In place of paying overtime pay, one mistake HR can make is to ask employees to take comp time instead. This practice is illegal under the Fair Labor Standards Act and can cause hefty penalties for employers. To rectify this situation, HR needs to review its policies on overtime and make sure they are complying with all federal labor laws.

Under the Fair Labor Standards Act, nonexempt employees (or those not earning at least $684/ week) must be paid 1.5 times their regular rate for any hours worked over 40 in a workweek. Whether the overtime is authorized or unauthorized, the employee must be compensated if work is performed.

Darren Shafae, Founder, ResumeBlaze

Julian Taylor, Employment Lawyer, Julian Taylor HR

Not Ensuring the Overtime Process Is Vetted

Make sure the overtime process is vetted to confirm that the employees claiming overtime have their manager's approval. Those paying for the overtime must know the hours being logged for situational awareness and budgeting reasons. This prevents budget overruns and also displays transparency, holding everyone accountable that overtime is for a legitimate purpose.

Also, confirm that the systems logging and calculating the overtime rates are correct so that employees are correctly paid. Paid overtime varies by different geographic jurisdictions; it's not always a time and a half, as there are places (under certain circumstances) where overtime is translated to double time, getting paid twice one's hourly rate.

Overtime needs to be defined clearly within that specific organization, as every entity manages its overtime in different ways. It's better to have rules explicitly laid out instead of incurring complications after an employee has invested additional labor hours.

Sasha Laghonh, Founder, Sasha Talks

Misusing the Fluctuating Workweek Method

As an HR specialist, I've seen firsthand how difficult it can be to manage employee overtime. One mistake that I think is too often made is failing to use the fluctuating workweek method when appropriate. This method helps employers save time and money; however, for it to be effective, there must be some strict guardrails in place regarding hour tracking.

Without these measures, managers overextend or underutilize employees, leading to an unfair imbalance of workload and potential frustration among the team. To rectify this misstep, managers need to ensure that policies are up-to-date and followed properly—from tracking total hours worked during each pay period down to calculating any overtime compensation owed. When done correctly, the fluctuating workweek method can provide a streamlined solution that helps alleviate stress andhelps easein the long run.

Paying Remote Employees for Unauthorized Overtime

As working from home has become more prevalent since the pandemic, employee schedules have become more erratic. With so many distractions at home, employees naturally take more breaks, and thus complete the same amount of work in a longer period.

Managers and human resource employees must still pay individuals who work unauthorized overtime, regardless of whether they have received clearance or not. Therefore, managers and human resource employees must assign clear work schedules and institute time-tracking software that easily allows employees to mark breaks or interruptions throughout the day.

Janelle Owens, Human Resources Director, Guide2Fluency

Haya Subhan, General Manager, Leeds First Aid Courses

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