The first round of increases to minimum salaries required to claim the Fair Labor Standards Act’s white-collar overtime exemptions took effect July 1. Unless blocked by federal courts, the second, larger increase in the minimum salary becomes effective January 1. Employers may feel helpless when it comes to increased overtime expenses. However, the new FLSA rules do not alter companies' authority to control employees' working time.
Many if not most employers have policies that require employees to obtain advance management authorization before working overtime. Employers are permitted to strictly enforce these requirements. The natural inclination of many managers is to attempt to dock employees who work unauthorized overtime. Under the FLSA, companies must pay overtime that is not specifically authorized if they "suffer" its performance. This means that if the employer knew or should have known that the employee was working overtime, it must pay that amount.
Instead of deducting unauthorized overtime from pay, legally it may be easier to take disciplinary action against the employee. Warnings followed by eventual termination can be a more effective deterrent against workers who repeatedly ignore restrictions on overtime work. Such disciplinary action also helps argue that the company did not suffer the overtime worked in the event it decides not to pay the additional hours. Under no circumstances should employers tolerate managers who work employees "off the clock" to avoid paying overtime. These practices can lead to serious civil and even criminal liability.
Some companies may conclude that the amount of work required to run the business simply cannot be performed without employees working overtime. In such situations, employers can consider use of an alternative pay plan such as the fluctuating workweek method. While these plans do not eliminate overtime obligations, they can significantly reduce the additional pay. These pay plans are not appropriate for every employee, and companies should consult with legal counsel before implementing an alternative salary structure.
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