Sometimes, consumer demand can’t be met over the course of a regular workweek. Employers in the retail and manufacturing sectors know this all too well, though any business could be affected by market fluctuations.
If the demand becomes high enough, employers might be inclined to make overtime mandatory. But is it the right thing to do? Before implementing such a policy, it’s essential to understand the legality of it and how productivity and employee engagement may be affected.
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What is mandatory overtime?
Requiring employees to work more than 40 hours per week is known as mandatory overtime. For each hour worked beyond this point, the Fair Labor Standards Act requires employers to pay their employees one and one-half times their regular pay rate. States may have their own overtime requirements, which could also affect an employer’s mandatory overtime policy.
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Learn MoreIs mandatory overtime legal?
The FLSA does not restrict the number of hours employees over age 16 can work, but federal and state laws might for safety reasons. Employers must also reasonably accommodate employees who have a disability or a sincerely held religious belief that would preclude them from working mandatory overtime. And if they are party to a collective bargaining agreement, employers should ensure it does not conflict with their overtime policy.
Implementing mandatory overtime policies
Employers should only mandate overtime when business conditions necessitate it. In such cases, it may help to:
- Consult an attorney when creating a mandatory overtime policy
- Apply the rules to all employees fairly and consistently
- Publish the policy in an employee handbook
- Provide advanced notice of when overtime will be needed
- Be reasonable when employees have legitimate reasons for being unable to work
Pros and cons of mandatory overtime
Mandatory overtime can help employers increase productivity during times of high demand. It also allows nonexempt employees to earn more money each pay period.
However, because workers are paid at a higher rate, mandatory overtime raises an employer’s payroll costs. The extra work hours could also make employees more stressed and fatigued. Those who value work-life balance may even become disengaged and look for job opportunities elsewhere.
Employers should carefully weigh these pros and cons before rolling out a mandatory overtime policy in the workplace.
How to avoid mandatory overtime: Tips for employers
Employers can minimize the need for mandatory overtime with better workforce planning. If they expect a labor shortage, they can hire part-time or temporary employees from a staffing agency to pick up the increased workload.
Sometimes, acquiring more help isn’t in the budget, though. When overtime is the only option, it’s usually best to first seek volunteers and save a mandatory policy as a last resort.
Frequently asked questions about mandatory overtime
What are the benefits of mandatory overtime?
Mandatory overtime can help employers meet deadlines and might help maintain productivity in the short term when demand is high. It’s also beneficial for employees who want opportunities to earn more money.
Who uses mandatory overtime?
Employers should only use mandatory overtime if there is a legitimate business reason for it. Requiring people to work excess hours regularly can increase their stress and may ultimately harm retention.
How do you build a mandatory overtime system?
Creating and rolling out a mandatory overtime policy usually requires legal counsel to help ensure it does not violate any federal or state laws. Once the policy is adopted, employers should formally publish it and apply it consistently to all employees, while being mindful of any legally required exceptions.
How much notice is required for mandatory overtime?
The FLSA does not require employers to notify employees in advance when working overtime will be mandatory, but state or local laws might. Legal requirements aside, many employers try to give workers reasonable notice of mandatory overtime to help preserve employee engagement.
Can employees who refuse to work overtime be fired?
Employers who are not prohibited from requiring overtime under certain federal and state laws can generally terminate employees who refuse to abide by their mandatory policy. However, the following precautionary measures are warranted:
- Ensure that a termination would not conflict with the terms of any collective bargaining agreement.
- Reasonably accommodate employees who have a disability or a sincerely held religious belief that would prevent them from working mandatory overtime.
- Consult legal counsel before terminating an employee for refusing to work mandatory overtime.
This guide is intended to be used as a starting point in analyzing mandatory overtime and is not a comprehensive resource of requirements. It offers practical information concerning the subject matter and is provided with the understanding that ADP is not rendering legal or tax guidance or other professional services. Please consult with your legal counsel.
