I see many employee policy manuals that prohibit “unauthorized overtime”, but employers must still pay an employee his overtime pay, whether the time worked was authorized or not.
Employers need to understand that all governmental enforcement agencies, such as the Texas Workforce Commission (“TWC”) and the U.S. Department of Labor (“DOL”), treat paychecks as sacred and not subject to any reduction or withholding because of a disciplinary reason.
Unauthorized overtime can result in disciplinary action, like a written warning, a suspension or a firing, but not docking of a paycheck or any refusal to pay.
The TWC explains it this way in their publication “Especially for Texas Employers”:
Many employers feel that such [overtime] should not be payable as long as the employer has not authorized the extra work, but the DOL’s position on that is that it is up to the employer to control such extra work by using its right to schedule employees and to use the disciplinary process to respond to employees who violate the schedule.
Just saying in your employee handbook that an employee cannot work overtime without prior authorization is not sufficient. You as an employer need to take steps to closely monitor (and pay for) all hours actually worked.
Having employees clock in and out with a virtual time clock is a very wise move. Not only will it help you keep accurate records of the time actually worked by your employees (an essential component of defending against any DOL or TWC audit), but an electronic time clock can provide you with a daily report to easily determine if someone is working after hours. It can even help you determine at the end of the workweek whether a particular employee needs to be sent home early to avoid overtime hours that week.
Today’s employers can have a difficult time monitoring overtime because the work often occurs away from the employer’s premises. For example, non-exempt employees who respond to their work emails from their smartphones at home or on weekends may be working overtime. The employer has to pay for that time regardless of whether the company “authorized” it or not.
An employer who wants to cut down on that kind of unauthorized and unrequested overtime work must adopt a written policy that specifically prohibits hourly employees from working at home or on the weekend, prohibits responding to emails after work hours, prohibits remote work from a home computer or otherwise prevents off premises overtime from occurring. Then the employer must enforce that policy with disciplinary action.
Meanwhile, when an employee violates that written policy, the employer must still pay up, until such time as the employer fires the employee for repeated policy violations.