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Can your employer have a policy forbidding overtime pay?

On Behalf of | Jun 11, 2022 | Employment

It is normal for a business to enact policies intended to minimize its operating expenses. Given that wages are one of the biggest expenses for many modern companies, it makes sense that employers will try to limit and control how much they spend on staffing. Overtime pay, in particular, can affect a company’s budget.

While a company does have control over its operations, some efforts to keep costs low might actually violate the rights of the employees involved. Is it legal or appropriate for a company to have a no-overtime policy?

Employers must follow the law

Companies have the right to establish any internal policies that do not directly violate state, local or federal laws. Given that there is a clear right to overtime pay under federal law, an overtime ban may seem inherently illegal.

A company can have a policy against overtime provided that it proactively prevents employees from putting in more than 40 hours in a given workweek. Preventing workers from performing overtime work is perfectly legal. However, refusing to pay them overtime way wages when they work more than 40 hours or punishing them for expecting full payment for their work would be a violation of that worker’s right.

Your employer can refuse to let you stay at work after your 39th hour as a means of preventing overtime wages from increasing their staffing costs too much, but they cannot refuse to pay you appropriately for hours that you have already worked. Learning about your overtime pay rights can help you hold the company responsible if they don’t pay you appropriately for the work you perform.