HR Management & Compliance

5 Questions for Avoiding Unpaid Overtime Claim

The idea behind overtime is straightforward, but the actual administration of it is anything but. Attorney Paul Lopez suggests that employers ask themselves five questions to see whether they are vulnerable to overtime-based lawsuits.

To avoid overtime-related problems, Lopez, a labor and employment attorney with the law firm of Tripp Scott, says you should be able to answer the following five questions:

  • Do we know which employees are nonexempt?
  • Do we know exactly how much time employees are working?
  • Do we have clear, written overtime policies?
  • Do we adhere to and enforce those policies?
  • Do we have the employees themselves verify their time records?


The answers to these questions may seem simple. But more often than not, Lopez says, employers find themselves in hot water because they don’t know the answers. Let’s take them one at a time.

1. Do we know which employees are nonexempt?
If an employee is exempt from overtime pay, you don’t have to worry that he or she will later claim you should have paid overtime for hours he or she actually worked. But be careful that the employee is truly exempt; just saying it, even if the employee agrees, does not make it so.

Carefully evaluate the duties and responsibilities of each job in your organization, and then make a determination of its exempt/nonexempt status. Thoroughly document your reasoning in the event you have to defend it someday.

California-specific policies on overtime, hours of work, and more! Learn more here.

2. Do we know exactly how much time employees are working?
You may feel safe if your employee handbook explicitly states that employees may not work overtime unless it is preapproved by their manager. But if you have employees who are expected to take a work cell phone home and answer customer calls, or work at their desk (or anywhere else) through lunch or break time, you could have a problem.

“If your employees are supposed to work 40 hours a week but are routinely doing these things—working, let’s say, an extra 20, 30, 40 minutes a day—the time over 40 hours a week they spend working is compensable. They are entitled to overtime compensation,” says Lopez.

Even in circumstances where the employee voluntarily puts in extra time, the test is whether the extra work benefits the company. “The analysis isn’t whether the company is asking them to put in overtime; rather, it is whether it is a benefit to the company,” Lopez says. “And 99 percent of the time, of course, it is going to be a benefit to the company.”

3. Do we have clear, written overtime policies?
“Many times, employee handbooks and policies say an employee cannot work overtime unless it is expressly authorized by a manager. That is typical, boilerplate language in every decent employee handbook,” says Lopez. “What often happens is a lawsuit is filed, and the employee says he worked overtime and didn’t get paid for it. The company says, ‘You never had approval for that so we don’t have to pay you for it.’”

But that’s completely wrong. “Even though the person didn’t get approval, and even though he didn’t get written consent from his manager to work the overtime, if he can demonstrate that he actually did work overtime, the law says he must be paid.”

4. Do we adhere to and enforce those policies?
“After that discussion, the next question I often get is, ‘Then what is the written policy for?’ My response is always that the policy is there to be enforced.

“If you have an employee who is constantly, routinely taking it upon himself or herself to work extra hours even though the manager is not approving it, you need to pay the person for the hours you believe are demonstrably overtime hours worked.

“But you also need to discipline the employee. Either terminate the employee for violating company policy, or warn them they cannot continue to do this, and then enforce your policy. I’ve had too many companies come to me with these great handbooks, and great policies and procedures manuals, but they’re not enforcing them. They’re collecting dust in a filing cabinet, and they’re not worth the paper they’re written on.”

Tomorrow, our analysis of the fifth and final question—plus an introduction to a valuable resource that provides you with all of the wage/hour handbook policies you need.  

Download your free copy of
Paying Overtime: 10 Key Exemption Concepts

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