Companies need to control their operating expenses to remain profitable. The cost of staffing is one of the biggest expenses for a company. Overtime wages, in particular, can quickly cut into a company’s profit margins. The need to pay 150% of a worker’s usual wages can be an expensive obligation for an employer.
It is therefore common practice to limit the number of hours that hourly employees work in a given week to avoid overtime pay requirements. Some companies go so far as to prohibit overtime without prior authorization from the company. Despite such policies, workers could occasionally end up putting in more than 40 hours per week.
Can a company refuse to pay a worker for that extra time because of a no-overtime policy?
Employers have to comply with the law
Technically, businesses can integrate any terms they deem appropriate into employee handbooks and contracts. However, the business still needs to follow all relevant employment laws.
Federal statutes make it necessary for businesses to pay workers overtime wages for the time that they have worked. While an employer can require pre-approval for overtime, it cannot refuse to abide by the law if a worker deserves overtime pay. Companies have the option of preventing workers from putting in extra time but not the option of refusing to pay them for time worked.
If a company refuses to pay after allowing employees to put in more than 40 hours, those workers may need to consider pursuing a wage and hour claim. Filing an employment lawsuit might be the only way to force a company to comply with overtime pay laws.