Overtime is a sticky subject for a lot of employers. With the Department of Labor’s overtime rule, business owners are, for the most part, able to limit their overtime liability to their non-exempt, or hourly, employees. But what do you do when an employee works overtime without your approval?

First, there are a few rules about what you cannot do. You can never refuse to pay an employee for overtime hours worked, even without your permission. You also are not permitted to make adjustments to a timesheet to show that the employee did not work overtime if he or she actually did. This is true even if the employee were to consent to the adjustment. (You are permitted to adjust a timesheet to reflect additional hours worked - including overtime - which otherwise would not be on the timesheet, however).

What you should do is to treat unauthorized overtime as you would any other violation of a company rule. This means that the rules pertaining to overtime should be included in your company handbook and should, optimally, be addressed via progressive discipline. In practice, this means that an employee would receive one or more warnings before harsher disciplinary actions (up to and including termination) are used.

Always make sure that you are taking all actions necessary to prevent unauthorized over time, such as making sure that one employee does not have too much on his or her plate, or that higher-ranking employees are not pushing their work onto subordinates who are then required to do more than their fair share. By implementing and enforcing unauthorized overtime policies, while still paying your employees for all hours worked, you can help keep your payroll costs down and prevent future labor claims and other expenses.