10 Tips to Reduce Your Overtime Costs


It is no secret that among an employer’s greatest expenses is the cost of employee time and labor. Further, the cost of HR administration and human error in payroll processing only adds to those costs… by a lot, yet they can be difficult to quantify. One of the most notable labor costs that often gets all the attention of business owners and supervisors… is overtime. The timeless question is… how do we minimize overtime without the obvious fix of hiring more staff or restricting overtime altogether?

With the upcoming FLSA salary exemption threshold changing on December 1st from $23,660 to $47,476, an estimated 4.2 million workers will become eligible for overtime pay.

Paying a premium for your employee’s time is often necessary, but what you may not know is just how many tips and automation features have been built to minimize OT costs while maximizing productivity. Ironically, when the proper tools are used employees often feel a greater sense of flexibility and control of their schedule while the employer enjoys more efficiency and cost savings.

10 Tips – Automated Timesheet Calculator

If the obvious fix of hiring more staff or restricting overtime altogether is not an option for your organization, here’s a list of tools and tips you can use to minimize the expense.

  1. Software Automation Immediately – Today, simple and affordable timesheet and scheduling software automation tools are readily available to conveniently track employee scheduling and hours. Most, if not all companies, will benefit greatly and discover immediate savings. However, if you have a dynamic workforce with frequent changes in shifts, work schedules, and employee hours, then automation is a must! You can save tremendously in labor dollars and administrative time simply by implementing automated time and labor software.
  2. Offering an Employee Self Service portal – When employees are offered better tools, two great things happen. Employees feel empowered and a sense of more control, and employers get more accountability. Give your employee access to a mobile or browser-based ESS portal where they can check their time card, view PTO balances, request time off, view their schedule, and conveniently be more accountable for their time.
  3. Stop rounding. Track hours to the minute – Do your employees manage their own timesheet? Do employees round in and out times to the nearest 15-minute mark? If so, you’re overpaying for labor, losing productivity, and overtime costs will be higher. Simply put, punch rounding promotes the habit of late arrival and early departure as employees come and go for both their shift and lunch break. Remove the rounding rule or adopt an automated time clock solution that makes it simple and convenient.
  4. Use Electronic Time Card Approvals – Your employees are busy, especially your supervisors. This means that approving time cards is often hurried and doesn’t get adequate attention due to the research that might be required to take action. If you want to empower supervisors while making accountability simple for employees, use an electronic time card approval process that makes reviewing the data fast and accurate for everyone involved.
  5. Add Time Card OT Request Notes – Do you require permission from employees to work overtime? A simple way to manage this process is to add notes directly to a time card by employees or supervisors. By requiring employees to document overtime requests, they’ll think carefully about the need to incur OT hours.
  6. Activate OT Alerts – Accruing overtime is often simply a lack of adequate visibility for supervisors or employees. Why not activate an OT threshold alert that displays on the employee’s time card that they’re getting close to OT? If the last day of the work week begins with this in the employee’s mind, they are better positioned to take corrective action.
  7. Use a scheduling tool to make smarter employee shift swaps – Often, overtime occurs when “the plan” or schedule changes. When life happens, employees frequently need to swap a shift and supervisors don’t have the time or tools to do a full OT analysis to find a replacement. This can lead to employees accruing too many hours. However, with automated employee scheduling software, the process of determining which employees are available, whether their skills are a match, and how close they are to overtime only takes seconds.
  8. Monitor employee lunch breaks – Without an automated time and labor solution, it is extremely common for some employees to be taking lunch breaks that are too short while other employee breaks are too long. These shorter breaks can lead to recurring increases in overtime. An automated timekeeping solution can quickly fix this problem.
  9. Daily Auto Emails – A simple way to stay ahead of overtime is for supervisors to receive a daily automatic email with employee punch times and hours right in front of them. If you see an employee routinely working 15 minutes over 8 hours per day, it’s easy enough to respond accordingly.
  10. Update your Employee Handbook – Ensuring your policy on overtime is clear in your Employee Handbook is typically half the battle. However, perhaps a lack of proper automation tools has prevented you from offering a practical or optimal overtime policy. By implementing an automated timesheet solution you can take better control while better accommodating the needs of all parties.

Minimizing overtime is very doable. If you’re not actively doing it, then you’re probably overspending on labor, payroll taxes, and beyond. It’s simply takes the right tools and a some education on what your time and labor software can do for you. Contact us at 941 Timekeeping for more information on preparing for the new FLSA overtime guidelines on December 1st, 2016.

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