Refusing to Pay Overtime

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Question

One of our employees constantly clocks in early and starts working before his shift is supposed to begin. He also clocks out after his shift is supposed to end. Since he does this all the time, he usually ends up working over40 hours a week, and we have to pay him overtime. However, we have a very clear policy stating that employees must receive prior approval before working overtime. Can we refuse to pay him for the unauthorized overtime he works, since he violated our policy and did not receive prior approval? If not, what can we do?

Answer

In its Fair Labor Standards Act (FLSA) Hours Worked Advisor, the U.S. Department of Labor (DOL)provides, “It is the duty of management to exercise control and see that work is not performed if the employer does not want it to be performed. An employer cannot sit back and accept the benefits of an employee’s work without considering the time spent to be hours worked.”

Thus, employers must timely pay all wages for hours that they know or should know employees worked. If an employee clocks in before his scheduled start time and starts working, this time is payable, even if it results in his working when he is not supposed to and incurring unauthorized overtime in violation of company policy. The same rule applies if an employee continues working and clocks out after his scheduled end time. As the DOL notes in its guidance, “Merely making a rule against such work is not enough. The employer has the power to enforce the rule and must make every effort to do so.”

That said, as the DOL suggests, an employer is not without recourse. Employees who clock in before the start of their shifts, clock out after their shifts end, and/or incur unauthorized overtime can be disciplined for any such policy violations. However, the disciplinary action for these types of infractions must stop short of failing or refusing to pay wages (including overtime) that are otherwise due.

In sum, while employees can be disciplined for violating company policies relative to adhering to a specific schedule, any proposal to dock pay as a form of disciplinary action can lead to unpaid wage claims. Employers should check their state and local laws for any additional rules that may apply.