You’re getting ready to run payroll and notice an employee has overtime on their timecard. You didn’t approve it, and they know they’re supposed to ask first.
Do you have to pay it?
Generally, yes. If the employee qualifies for overtime and you knew or should have known they were working, you generally owe the pay.
You can still speak with them about breaking your policy. But before you make any changes to their timecard, here’s what you need to know.
First, Confirm What Was Worked
Ask your employee about the extra hours.
Were they finishing an assignment? Helping a customer? Did their supervisor tell them something needed to be done before they left?
Find out why they stayed. There may be more to it than someone ignoring your instructions.
Check their timecard against their schedule and any messages or assignments that help explain what happened. If they missed a punch, get the information needed to correct it.
If something doesn’t look right, ask about it. Do not delete hours just because nobody approved them. Save the original entry and document any changes.
Check Whether Overtime Is Due
Working beyond a scheduled shift doesn’t always mean an employee earned overtime.
Under the federal Fair Labor Standards Act (FLSA) rule, nonexempt employees earn overtime after 40 hours actually worked in a workweek.
For example, someone scheduled for 30 hours who works 33 generally hasn’t earned federal overtime. Someone who works 43 has.
A workweek is a fixed, repeating seven-day period. It doesn’t have to start on Monday.
Check your state’s rules too! Some states require overtime based on how many hours someone works in a day.
And if your employee is salaried, don’t stop there. A salary alone does not make someone exempt from overtime. Their duties and compensation must meet the requirements. Not sure of the difference between exempt vs. non-exempt? We're here to help!
Pay the Hours, Even Without Approval
“But it’s in our handbook.”
You may have a clear policy. Your employee may have signed it. That still doesn’t remove their right to overtime pay.
Under the typical federal rule, eligible employees receive at least 1.5x their regular rate for hours worked over 40.
If an employee’s regular rate is $20 and they work 43 hours, the calculation would be:
Be mindful that some bonuses and commissions can affect regular rate.
Paying biweekly does not change how overtime is calculated. If someone works 43 hours one week and 37 the next, you cannot average them together and say they worked 40 each week.
Overtime is due on the payday for the pay period in which it was earned.
Look for Work That Wasn't Recorded
An employee clocks out, then works another 20 minutes after. Do these minutes count?
They can. Clocking out doesn’t mean the work should go unpaid.
We see the same issue come up with sending emails from home or taking phone calls during a lunch break. An unpaid meal break requires employees to be relieved of their duties. If they’re eating while answering customer calls, you shouldn't deduct the break.
What if you had no idea they were doing any of this?
That depends on whether you knew or reasonably should have known. If a supervisor sees an employee working after they’ve clocked out, that time needs to be addressed.
Never tell someone to leave time off their timecard because it wasn’t approved.
Document All Conversations
Always document situation like these! Whether you’re handling unauthorized overtime or even an employee injury, write down what happened while the details are fresh in your mind.
Keep a record of:
- The dates and additional hours worked
- What the employee was doing
- Why they didn’t request approval
- Any instructions they received from a supervisor
- Corrections to their timecard and how they were paid
- What you told them to do going forward
Give them an actual next step. If their shift ends at 5 and a task isn’t finished, who should they call? Can it wait until tomorrow?
Federal rules require keeping payroll records for at least three years. Supporting records used to calculate wages, such as timecards and schedules, generally need to be kept for two years. Your state may require longer.
Can you Discipline Your Employee?
Paying the overtime doesn’t mean you have to overlook a policy violation.
If an employee worked overtime without approval, start by asking what happened. If they didn’t know who to ask or how to get approval, you may only need to have a quick conversation.
If you’ve already explained the process and it keeps happening, a written warning may make sense. Before taking disciplinary action, check what the law and any employment agreements state.
Also, look at what managers have been allowing. If a supervisor regularly tells employees to finish everything before leaving, that needs to be addressed.
Employees must continue reporting all their hours. You cannot retaliate against them for making a protected complaint about unpaid wages. Make sure any disciplinary action is based on the approval violation.
Prevent It Before the Next Payroll
By payroll day, there isn’t much you can do about hours already worked.
Check employee hours during the week. Overtime alerts can help you spot someone approaching 40 hours, but a manager still needs to decide what happens next.
Maybe a task can wait. Maybe someone else can take over. Or you may need to approve the extra time.
Employees should know who can approve overtime and what to do if that person isn’t available. Don’t leave them guessing whether they should go home or finish the job.
If several people regularly need extra hours, take a look at their workload. Is there enough time in the schedule to complete what you’re asking?
Be careful with automatic clock-outs or limits on clocking in. Those settings don’t stop someone from working. Employees still need a way to report the time, and managers need to make sure they do.
FAQs About Unauthorized Overtime
🔹 Can an employee agree to work for free?
No. Even if they offer to stay and finish something, they cannot waive overtime pay they’re entitled to under the FLSA.
🔹 Can we give them time off instead?
Private employers generally cannot give time off in a later workweek instead of paying overtime already earned. Certain public employers have different rules.
You may be able to adjust the employee’s remaining schedule within the same workweek, before overtime occurs. Check state overtime and scheduling requirements first.
🔹 What if the employee never clocked in?
Ask when they worked and what they were doing. Review the information available and correct the records as needed. A missing punch doesn’t automatically mean the work is unpaid.
🔹 What happens if we refuse to pay?
Your business could owe the unpaid wages plus additional damages. Depending on the circumstances, attorney’s fees, court costs, and penalties may also apply. State law can add further liability.
A disagreement about approval can become a much more expensive wage dispute.
Don't Wait Until Payroll Is Due!
If unauthorized overtime keeps happening, figure out why. Your employees might need clearer instructions, your managers may be allowing it, or the schedule may need to change.
Keep accurate records and address problems when you notice them. It’s much easier to have that conversation during the week than after the same issue appears on another timecard.
Have questions about keeping employee hours and payroll organized? Contact MegaPay to learn how we can help.
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