Several companies have come under fire for not properly compensating employees for overtime hours. Starbucks, for example, has dealt with many overtime lawsuits, totaling almost $18 million in fines. While managing employees and their schedules is a necessary task to keep business running smoothly, it has also been a source of legal trouble for many companies who aren’t accurately accounting for employees’ hours.
Although lawsuits are a consequence of improper compensation, there are ways to avoid it. For starters, companies should ensure that employees are fulfilling tasks solely related to their job description. For example, employees in the managerial role should not be running food to tables or bartending when short-staffed.
When employees are tasked with duties unrelated to their job titles, they may decrease their overall productivity as they have to direct their energy elsewhere. Any task the employee might have to fulfill that is unrelated to their job description should be discussed upon hiring and before a contract is signed. Regardless, employees should always be compensated for their time spent working at your business.
Besides the legal complications of accounting for overtime hours, there are many aspects to consider before allowing your employees to clock out later. Burning out as well as developing physical health problems are just two downfalls of working overtime. Studies have also shown that the possibility of developing depression doubles when working long overtime hours.
From a business standpoint, there are several liabilities that could lead to lawsuits if the appropriate amounts are not paid out which would add up to much more money over time.
The logic many companies have behind an overtime policy is the belief that the company will be more likely to meet its financial and production goals with the extra work, which will result in a higher return on investment. Companies feel they are able to deliver more products and services, create more advertisements, and ideally gain more profit.
Considering there are many instances where employees are doing extra jobs to keep business strong, they are oftentimes staying longer than their scheduled 40 hours per week to get everything done. By having an overtime policy that everyone understands, you eliminate the possibility of legal action while simultaneously satisfying your employees.