Honesty is the Best Policy: Overtime Edition

February 10, 2022

Do you believe that companies should be transparent about their reasons when they make sweeping policy changes? Read about an overtime policy change that left some employees reeling and feeling misled.

woman works on computer with light fading outside

Do you work overtime? Are you expected to? Do you choose to? Do you feel that companies should allow overtime pay?

These are just some of the questions that prompted me to write about this topic. I wanted to know how people feel about overtime and I discovered that it is quite a mixed bag. Let me rewind a bit and give some personal context to my decision to write about overtime.

woman works on computer and checks phone

On February 1st, I got a text from my partner that really rocked my world: “Overtime is banned at my job. Effective immediately.” While many people might think that this sounds like a good thing, for us it was earth shattering. Or maybe I should say “budget shattering”. My partner has been working weekly overtime for YEARS. He works a remote finance job for a large company and there is always more to do. While he isn’t expected to work a minute over 40 hours, he enjoys staying on top of everything and avoiding the stress of things piling up because he was forced to clock out. He has happily worked, at least, 10 hour days for as long as he has been with this company, and the time-and-a-half pay for overtime truly helps keep him from feeling burnt out with the long hours.

I know that long hours aren’t everyone’s cup of tea, but he likes them and they help keep his department on top of their game. Because of the consistency of the overtime, we have come to depend on that as a part of his income. We made life decisions and budget decisions based on that. We had no reason to think that we shouldn’t. Until last week. His entire department was gathered together for an announcement that the company was taking the employee’s work/life balance seriously, and because of that, would be banning all overtime, effective immediately. No notice, no option to work it if they felt they wanted to, no input from the employees taken into consideration. Just like that, we watched a massive chunk of his yearly salary disappear into oblivion. Now, some people in his department were thrilled with this. Conversely, some were as panicked as my partner and I. It really feels like “work/life balance” is in the eye of the beholder. Some people thrive with shorter hours, others truly love choosing to work long days and reaping the financial benefits. When you choose a position with a company that says they have an overtime option, you assume that means you will always have that option. I really disagree with any company that would make a sweeping judgement about what is best for all employees without taking the time to interview them and determine the impact it will have on their lives. 

woman sitting in bed working on a monthly budget

Needless to say, this has led us on quite the crash course in reconfiguring our budget. But it has also left my mind reeling with questions about overtime, its history, and how people feel about it.

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During my research I discovered COUNTLESS articles about how overtime is bad for companies. I was left wondering if this wasn’t about work/life balance for employees at all. Perhaps it was about the bottom line.

The History of Overtime

According to an article from Minimum-Wage, “Overtime is a regulation of organized labor designed to help improve the working hours and working conditions of workers, and prevent exploitation by their employers. Under the United State’s current overtime rules, employers must pay their employees “time-and-a-half” wages (one and a half times the employee’s regular hourly wage) for all hours worked over the national overtime limit of 40 hours per week.”

Statue of President Franklin Roosevelt

In 1938, President Franklin Roosevelt instituted the Fair Labor Standards Act (FLSA). This provided a myriad of new safety and pay regulations for qualified employees. Prior to this, workers were often required to work insufferably long and underpaid hours at their jobs. FDR sought to accomplish two main goals with this act. First, to make sure employees were not overworked and second, to encourage the hiring of more employees (and ultimately to decrease unemployment). The FLSA had many exemptions (including salaried employees) but it was altered in 2004 to include some previously exempt employees. The alterations were called the FairPay rules, which ultimately caused much debate as millions of employees lost protection from overtime. According to a 2004 news release on the U.S. Department of Labor website, “The new rules expand the number of workers eligible for overtime by nearly tripling the salary threshold. Under the 50-year-old regulations, only workers earning less than $8,060 annually were guaranteed overtime. Under the new rules, workers earning $23,660 or less are guaranteed overtime. This strengthens overtime protection for 6.7 million low-wage salaried workers, including 1.3 million salaried white collar workers who were not entitled to overtime pay under the existing regulations. These workers will gain up to $375 million in additional earnings every year.” While many were excited to be able to take advantage of these new rules, others were afraid that they would be required to work longer hours than they wanted to.

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Final Thoughts

man and woman arguing at work

18 years later there is still a fair amount of debate about overtime and whether or not it is a good thing. But here are three of my thoughts on the matter:

  • If a company allows overtime, changes should never be made without notice.
  • If overtime is approved it should be worked by choice and not by mandate.
  • Companies should not make sweeping changes to overtime policies in the name of “work/life balance” without taking into account the people whose lives will be negatively affected by the change.

I have seen the benefits of overtime in our personal lives. But this experience was truly a lesson in Benjamin Franklin’s quote, “Nothing is certain except death and taxes“. While I feel that I fall solidly on the “for” side of the overtime argument, I can understand that it is not the right fit for every company or every employee. I think the biggest takeaway from this situation for any business is this: Be honest with your employees. Don’t do something for your own financial gain under the guise of helping your employees. When they see something like that take place, it will leave them feeling demoralized and under-appreciated. Working for a business that makes people feel that way can quickly lead to burn out and ultimately resignation. Honesty is ALWAYS the best policy.

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