Creating an Overtime Policy

Key points to include

It’s critical to define terms that will help your employees understand your policy. For example:

1. Nonexempt vs. exempt employees
2. Acquiring permission to work overtime
3. How your manager will notify you that overtime is required
4. Compensation for overtime

In an overtime policy, it’s most important to explain how the overtime process works. Some things to consider:

• Knowing your eligibility for overtime
• How is overtime pay calculated? When is it paid?
• Consequences for working overtime without following procedures

Why it matters

After you’ve fleshed out your overtime policy, take a moment to think about why the policy is necessary. It’s important that employees understand and buy into the need for an overtime policy. How does it actually benefit employees? You’ll likely find it easiest to develop the “why” after drafting the detailed policy. However, it’s best to START your overtime policy with the reason behind it so your employees are more likely to continue reading.

For example, to highlight the reasoning behind your overtime policy, you might introduce the policy this way:

You may sometimes be required to work beyond your normal hours to fulfill business needs. When we anticipate situations that might require overtime, we will try to provide as much notice as possible. This policy is designed to make sure that eligible employees are correctly compensated for their time. Additionally, it helps us monitor your hours to prevent employees from becoming overworked.

What’s trending

With so many companies offering flexible working arrangements, employees have more opportunities to find jobs that mesh with their needs and lifestyle. That said, it’s important that you have an established overtime policy that communicates what employees can expect — a policy that assures them that they will be treated fairly if the need for overtime arises.

When employees become burnt out, you are likely to see decreased productivity and engagement. This can lead to greater turnover which, in turn, impedes business continuity. Plus, excessive overtime can also result in costly errors and increased workplace injuries.

Additional notes

Refer to related policies when possible. This might include referencing:

• Attendance / Punctuality
• Employee classifications
• Pay practices
• Work schedule

While you’re perfecting your handbook, check out some other Blissbook content focused on policy creation:

• How to Write Policies & Procedures
• How to Write a Culture-First Employee Handbook