Ramping up resources to handle more work in less time is a common practice in business. Often, contractors and employees are eligible for additional pay, called overtime, for hours worked beyond the standard 40-hour work week. Overtime pay is different from shift differential pay
, where employers pay more to employees who work a normal shift length outside of standard business hours.
It can be tricky to track and navigate the details of working overtime, and there are laws and rules to abide by. According to the United States Department of Labor
, “Unless exempt, employees covered by the Fair Labor Standards Act must receive overtime pay for hours worked over 40 in a workweek at a rate not less than time and one-half their regular rates of pay.”
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Pros of Working Overtime
When workers choose to work extra hours to finish a task or project sooner, the benefits can be attractive:
- Bring home a bigger paycheck through time and a half, or double time for holidays in some cases.
- Discover more opportunities for advancement, as you prove you are dedicated and focused on getting the job done.
- Enjoy increased productivity due to occasional extensions to the workweek.
Cons of Working Overtime
For all the upsides, there are also notable downsides to working overtime:
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- Strains on your physical health due to working longer than usual, especially when performing repetitive physical tasks or getting less sleep
- Burdens on your mental health due to longer periods of focus and/or fewer breaks
- Misaligned work/life balance with less free time to unwind and recuperate between shifts and days
Overtime vs Crunch
While overtime is an opportunity for workers to earn additional pay for volunteering to put in more time, crunch is very different. Crunch (also called crunch time or crunch mode) is a form of unpaid, mandatory overtime that originated in the video game industry but can be found in many deadline-driven industries, from software development to construction. Staff are forced to work long hours to finish a project with a strict deadline, such as a scheduled release or planned update.
The idea behind crunch is that employees who are salaried and otherwise “exempt” are expected to work long hours until the project deadline has been met. This practice often causes workplace culture problems
and pushback from disgruntled workers. Further, crunch time can reflect badly on you as the project manager, suggesting an inability to set reasonable deadlines
Overtime Budgeting and Billable Hours
In order to keep track of this extra time and effort, there are several necessary strategies for staying on budget while working overtime and managing billable hours for the project team.
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- Set a separate billable hourly rate for each role and enter this into a tracking system.
- Set an invoicing schedule for each individual and enter those hours upon receipt.
- Closely log and track hours per person, per project and review as often as you can to stay on top of overages and overspending.
- Produce periodic reports for review with management and utilize what is left of their time against the budget.
Understanding Federal Overtime Laws
There are federal and state laws governing what industries and what types of employees can benefit from and participate in overtime pay. The Fair Labor Standards Act
(FLSA) was passed in 1938 to set a minimum wage rate and establish wage rules for employees, particularly for minors under the age of 18.
Among other things, these employment laws stipulate that:
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- When eligible employees work over 40 hours a week, they are entitled to overtime pay, which is equivalent to time and a half.
- Certain states have their own rules, which are different from federal law, and the better of those laws rule.
- Certain exemptions exist, and assuming the overtime rules never apply to salaried employees can put a company in hot water.
- A workweek is defined as any seven, consecutive 24-hour periods and can begin at any time on any day.
- Misclassifying employees as independent contractors is illegal.
The Impact of Remote Work on Overtime
Working remote does not mean working less just because workers are not physically present. Indeed, remote workers are already working more hours because they are connected longer and checking in at odd times of the day and night by habit.
Just because they are working longer hours does not mean they are being more efficient. There is a balance between trusting a worker is putting in the full amount of time and checking in to see if they are. Not having a commute into an office may open up more work availability. It is up to the employee or contractor to accurately track their time and honor what is expected of them in a given day.
Working remotely blurs the lines of the work day and makes it harder to track overtime hours, versus what can be expected to be accomplished in an eight-hour day or 40-hour workweek. There is opportunity for both employees and employers to take advantage of this more flexible system.
How Much Overtime Is Too Much?
If you have employees or contractors on your team that are working overtime to a significant degree, there are some ways to eliminate and prevent burnout. Increasing the amount of break time during the workday will provide workers much-needed time to disconnect and tend to their personal wellbeing.
Promoting work/life balance is also important; workers should have the ability to take and make the time for self care. Providing work-from-home options for certain tasks and encouraging the use of vacation time will also help balance out the extra effort of working overtime. This way, workers can fully enjoy the benefits of the extra money they earn.
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