Use Overtime as a Part of Your Benefit Plan

6 min readSep 18, 2020
Photo by Kelly Sikkema on Unsplash

American overtime laws stipulate a detailed and comprehensive overtime regime. Starting from 1937’s Fair Labor Standards Act (FLSA), nationwide regulations have created worker protections and provided a minimum standard for employees when it comes to working long hours. It also set the base overtime pay rate as 1.5x a worker’s regular pay, known as ‘time-and-a-half’.

But, some might ask, why should we settle for the minimum? In such an incredibly competitive labor market, talented workers are looking for a benefits package from employers that will be lucrative enough to convince them to join the team. And for companies looking to draw top talent, using overtime as part of a benefit plan can be a smart move indeed.

There are a number of ways that this can happen, from using negotiation privileges during the negotiation process to playing with day limits and double time to setting aside particular days as paid holidays (on which you can be paid overtime). These are only a few strategies, and the experts here at actiTIME have described them at length below so that your business can be as informed as possible when assembling a benefits package that will help you land the best team possible.

Use Overtime as a Negotiation Sweetener

When it comes to overtime, workers are already entitled to a few privileges.

First, under the FLSA, they can start earning overtime pay (usually time and a half) after they’ve worked over 40 hours in one workweek. Here ‘workweek’ refers to a consecutive set of seven days laid out in the worker’s original contract. This is the ‘base floor’ that you can work up from to construct an attractive overtime benefit plan.

When negotiating to onboard top sales professionals, you will want to note the regulations concerning commissions overtime, which allows for increased overtime rates commensurate with the amount of commissions earned. This is the same with benefits, as goal-based benefits can also be a strategy to bring out the best in your sales employees. By increasing commission- and benefit-based overtime rates, you’ll be a more attractive prospective employer and you’ll be creating incentives for increased sales.

Another way to sweeten negotiations is to offer overtime pay to professions that are normally excluded from the benefit. It might seem strange, but there’s an entire list of professions that do not qualify for overtime. Many of these are white-collar, professional workers, and they were originally excluded because of the FLSA’s focus on blue-collar and manual workers. Since the regulation was passed during the Great Depression, these were the workers focused on most.

But, today, professionals (particularly in the IT sphere) are highly-sought after, and not offering some kind of overtime benefit package will make you seem like a less-interesting employer. This is especially true for programmers and software engineers who will certainly put in long hours before launches and will want to be recompensed properly.

Take a look at both the FLSA conditions as well as additional state overtime laws to get a sense of where the holes are, and then try to find ways to fill them. By having an extra few benefits in your pocket at the negotiation table, you’ll have a few extra ‘chips’ to throw into the pile. The point is making a win-win situation, and this is one excellent way to do just that.

Offer More Overtime Opportunities (Including Double Time) in Your Benefit Plans

Another way to bulk up the FLSA’s original provisions is to enhance the different conditions that lead to overtime hours being clocked, or that increase benefits to workers who choose to stay for overtime. One of the first things you can do is think about setting some daily overtime thresholds.

As of now, the nationwide threshold for overtime is 40 hours a workweek, as we mentioned above. After that, workers start accruing overtime. Some states have already started implementing their own daily limits, meaning that in Alaska, Nevada or California you’ll start accruing overtime once you’ve worked more than 8 hours in one day. In Colorado, overtime starts once you’ve worked over 10 hours.

But this is something that employers can add into their contracts to create a great benefits package. Take a look at the difference between the following two paychecks for employees earning $20 an hour. The first one, without a daily threshold would look like this:

And for the second employee, with a daily overtime threshold of 8 hours.

By showing your prospective team members that they will be earning more from the same weekly hours, you’ll already have their attention.

Another strategy to use is upping the overtime pay from time-and-a-half to double-time. Meaning that if someone earns $20 an hour, overtime will be $40 and not $30 an hour. This is something that already exists in California for workers who have been on the clock for more than 12 hours a day. Creating conditions for double-time, either by setting a threshold or having specific days count as double-time (6th or 7th consecutive day on the job, or perhaps any weekend or holiday).

And speaking of holidays…

Throw in a Few Paid Holidays

Another great way to create a compelling benefit plan is to give employees paid holidays.

As we’ve covered in another post, there are ten federal holidays in which government organizations are closed for the day. These include New Year’s Day, Independence Day, Christmas and more. Many businesses also shut their doors for the day, or declare work not obligatory. But these companies are not obliged under the FLSA to provide overtime hours for those who choose to work on those days, which provides an opportunity for you to stand out from the crowd.

In addition to the ten federal holidays, you can offer additional paid holidays that, if your professionals choose to work those days, you can offer overtime rates. These can include days like Easter Monday, New Year’s Eve or the days surrounding Thanksgiving Weekend. Of course, you can also offer double-time on especially significant days to sweeten the deal even more.

This can be key for sales and retail staff, who are often compelled to work on common paid holidays like Black Monday and Boxing Day. By giving additional overtime benefits, especially on days when stores are making large amounts of sales, you’ll be making sure your a-team will be on the floor and working hard to push your business forward.

Another element of overtime is comp time, which allows workers to accrue paid vacation instead of being paid out at overtime rates. For overworked retail sales reps after the holidays, extra (paid) time off can be more of a draw.

In any case, adding extra overtime privileges as part of a benefit plan will bring benefits to you and your workers alike. The next step is in keeping track of all the hours (and what rates you pay them out at), so feel free to start your 30-day actiTIME trial. We’ve got your back!




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