Sample Overtime Wage Hour Policies

Sample_Documents

DISCLAIMER: This is a sample template provided for informational purposes only. It does not constitute legal, tax, or financial advice. Organizations should consult their own legal and tax advisors and tailor this document to reflect their specific business needs, geographies, and applicable laws.

Document Header

Field	Value
Document Type	Overtime & Wage Hour Policies
Category	Compliance & Governance
Title	Overtime & Wage Hour Policies for <Company Name>
Version	<Version Number> (e.g., v1.0)
Effective Date	<Date>
Last Reviewed	<Date>
Next Review Date	<Date> (e.g., 12 months from Effective Date)
Document Owner	<Title/Function> (e.g., Head of Total Rewards)
Document Approver(s)	<Approver Name/Title> (e.g., Chief People Officer); <Approver Name/Title> (e.g., General Counsel)
Legal Entity Scope	<List of Legal Entities>
Geography Scope	<Country>; <State/Province>; <City/Prefecture>
Related Policies	Timekeeping & Attendance Policy; Travel & Expense Policy; Remote Work Policy; Leaves of Absence Policy; Code of Conduct
Supersedes	<Prior Policy Name/Version>
Confidentiality Level	<Internal/Public/Confidential>

Purpose and Objectives

Establish uniform, compliant, and auditable overtime and wage-hour practices across <Company Name>.
Define classifications of employees for overtime eligibility and the rules for calculating overtime and premium pay.
Set expectations for timekeeping, scheduling, meal/rest breaks, and compensable time.
Minimize legal and financial risk through clearly defined roles, controls, and review processes.
Provide guidance to Total Rewards professionals for policy administration, systems configuration, and continuous improvement.

Scope and Applicability

In Scope

All employees of <Company Name> and its covered affiliates within the Geography Scope.
Full-time, part-time, temporary, and fixed-term employees, including hourly and salaried nonexempt roles.
All timekeeping, scheduling, overtime, premium pay, travel time, on-call, training time, and related wage-hour practices.
Use of contingent workers where <Company Name> determines scheduling or pay practices and is the employer of record.

Out of Scope

Independent contractors engaged via <Vendor Name> where <Company Name> is not the employer of record.
Commission-only contractors or agency workers covered by separate agreements.
Countries or entities explicitly excluded in the Geography Scope.
Executive compensation and sales incentive plans except where elements must be included in the regular rate of pay.

Applicability

This policy applies to covered employees in <Country> and any sub-jurisdictions noted in the Document Header.
Where local law, collective bargaining agreements, or employment contracts provide greater protections or benefits, the more generous terms prevail.
In case of conflict, the order of precedence is: applicable law, collective bargaining agreement, individual employment contract, this policy.

Legal and Regulatory Framework

This policy is designed to align with applicable wage-hour laws in <Country>, including statutes, regulations, and authoritative guidance in relevant <State/Province> and local jurisdictions.
Laws differ by jurisdiction. Examples include weekly overtime thresholds (e.g., 40 hours), daily overtime requirements (e.g., beyond 8 hours in some jurisdictions), double time provisions, premium pay for 7th consecutive day, and meal/rest break mandates.
Some jurisdictions restrict compensatory time in the private sector, impose penalties for missed meal/rest periods, or require record retention of specific duration.
Collective bargaining agreements may modify overtime rules and pay premiums; consult <Union Name> agreements where applicable.
<Company Name> will review changes in law and update this policy as needed. This document does not exhaust legal requirements; consult Legal for interpretation.

Definitions and Employee Classification

Key Terms

Nonexempt Employee: An employee entitled to overtime and premium pay under applicable law.
Exempt Employee: An employee who meets legal exemption criteria from overtime based on duties tests and minimum salary thresholds defined by law in <Country> and <State/Province>.
Workweek: A fixed and recurring period of seven consecutive 24-hour periods. For <Company Name> the standard workweek is <Day> 12:00 a.m. through <Day> 11:59 p.m.
Workday: A fixed 24-hour period beginning at <Time> on <Day>, used for daily overtime and break calculations in jurisdictions requiring daily standards.
Regular Rate of Pay: The hourly rate used to calculate overtime, including base hourly wages and certain nondiscretionary payments as required by law.
Hours Worked: All time an employee is suffered or permitted to work, including certain travel, on-call, training, and preparatory activities as required by law.
Nondiscretionary Bonus: A bonus promised or expected that must be included in the regular rate calculation.
Discretionary Bonus: A bonus with sole employer discretion, not tied to prior promises or formulas; typically excluded from the regular rate where permitted by law.

Exemption Determination and Controls

Exemption status must be determined by HR and Legal using documented duties tests, salary basis tests, and local thresholds. Titles alone do not determine exempt status.
Total Rewards maintains a job catalog with job evaluation criteria and maps each job to an exemption status for each jurisdiction.
Changes in pay practices, job content, or salary thresholds trigger a review of exemption status prior to effective date.
Managers may not unilaterally classify or reclassify roles. Exceptions require Legal and Total Rewards approval.
Annual audits verify classification accuracy and documentation completeness.

Standard Workweek and Workday

The standard workweek for <Company Name> begins on <Day> at <Time> and ends on <Day> at <Time>.
Where required, the standard workday begins at <Time> each day for purposes of calculating daily overtime and meal/rest breaks in jurisdictions that require daily standards.
Workweek and workday definitions are fixed and may not be changed retroactively to avoid paying overtime.

Overtime Eligibility and Calculation

Eligibility

Nonexempt employees are eligible for overtime and applicable premium pay.
Exempt employees are not eligible for overtime unless mandated by a specific local law or collective agreement; any such exceptions must be documented in local addenda.

Overtime Triggers

Weekly Overtime: Hours worked over <Hours> per workweek (e.g., 40) are paid at time-and-one-half.
Daily Overtime: In certain jurisdictions, hours worked over <Hours> per workday (e.g., 8) are paid at time-and-one-half; hours worked over <Hours> per workday (e.g., 12) may be paid at double time where required.
Seventh Consecutive Day: In some jurisdictions, overtime applies for work on the seventh consecutive day in a workweek; verify local rules.
Public Holidays: Work on designated public holidays may require premium pay per <Country> or <State/Province> law or local policy.

Overtime Rates

Time-and-One-Half: 1.5 times the employee’s regular rate of pay for overtime hours where required.
Double Time: 2.0 times the employee’s regular rate of pay for hours meeting specific thresholds where mandated by local law.
Premium stacking: When multiple premiums apply, calculate per local law. Generally, overtime multipliers apply to the regular rate, which includes certain nondiscretionary premiums; separate penalty premiums may be paid in addition if required.

Hours Included and Excluded

Included in Hours Worked: All time performing principal activities; required training; time on duty during on-call; certain travel during normal work hours; preparatory and concluding activities integral to the job; short rest breaks of <Minutes> minutes or less where required to be paid.
Excluded from Hours Worked: Uninterrupted, duty-free meal periods of at least <Minutes> minutes; bona fide off-duty on-call time; ordinary home-to-work commute; voluntary attendance at training outside working hours meeting all legal criteria; paid time off unless local law requires inclusion.
Local variations apply. Where laws require counting certain paid absences toward overtime (e.g., in specific collective agreements), follow the more generous rule.

Regular Rate of Pay Components

Included: Base hourly wage; shift differentials; nondiscretionary bonuses; production or attendance bonuses; commissions where applicable; cost-of-living differentials if nondiscretionary.
Excluded: Reimbursed expenses at or below actual cost; discretionary bonuses; gifts; payments for leave (holiday, vacation) unless local law requires inclusion; certain benefit contributions; premium payments for overtime itself.
Allocation of Nondiscretionary Bonuses: Spread across the workweeks of the bonus earning period to adjust the regular rate and recompute overtime using required formulas.

Examples of Overtime Calculation

Example 1 Weekly Overtime: An employee earns <Amount> per hour and works 46 hours in the workweek with no bonuses. Overtime hours are 6. Overtime premium is 0.5 x <Amount> x 6. Total pay = (<Amount> x 46) + (0.5 x <Amount> x 6).
Example 2 Bonus Allocation: Employee earns <Amount> per hour, works 45 hours in each of 4 weeks in a month, and receives a nondiscretionary bonus of <Amount> for the month. Allocate the bonus across the 4 weeks, recalculate the regular rate each week, and pay additional overtime premium on the bonus portion as required.
Example 3 Shift Differential: Base <Amount> per hour, night shift differential <Amount> per hour, 8 overtime hours. Regular rate includes differential. Overtime premium is 0.5 x (base + differential) x overtime hours.

Shift Differentials, Hazard, and Other Premiums

Shift differential and hazard premiums that are nondiscretionary must be included in the regular rate.
Where separate premiums are mandated (e.g., spread-of-hours in certain localities), pay them in addition to overtime unless local law directs otherwise.

Compensatory Time Off (Comp Time)

In the private sector within <Country>, compensatory time off is generally not an alternative to paying cash overtime unless expressly permitted by law or contract.
Where comp time is permitted, it must be documented in a written agreement, accrue at no less than the legally required rate (e.g., 1.5 hours of comp time per overtime hour), and be scheduled in compliance with law.

Timekeeping and Attendance

Recording Time

Nonexempt employees must accurately record all hours worked each day using <Timekeeping System Name>.
Time entries must reflect actual start time, end time, and meal periods. Pre-populated or automatic hours may not be used to replace actual punches.
Off-the-clock work is strictly prohibited. Work must not begin before the recorded start time or continue after the recorded end time without authorization.

Time Rounding and Grace Periods

Where legally permitted, <Company Name> may use neutral rounding to the nearest <Minutes> minutes (e.g., 15-minute increments), applied consistently and without systemic underpayment.
Grace periods for clock variance do not authorize unpaid work. Any work performed during a grace period must be paid.

Corrections, Approvals, and Audits

Employees must review and submit their timecards by <Day/Time>.
Managers must approve timecards by <Day/Time> and resolve exceptions prior to payroll close.
Corrections to time records must be documented with a reason and employee acknowledgment where feasible.
Payroll and HR Operations will run exception reports for missed punches, excessive edits, and rounding impacts.

Unauthorized Overtime

Overtime must be pre-approved by a manager per department procedures.
If unauthorized overtime occurs, it must still be paid. The employee may be subject to performance coaching or discipline for violating the scheduling policy, not for reporting time worked.

Scheduling, Meal and Rest Periods

Scheduling Practices

Managers should publish schedules <Number> days in advance where operationally feasible.
Schedule changes require prompt employee notification and compliance with any predictive scheduling laws in applicable jurisdictions.
Split shifts, clopening, and extended shifts must comply with local premium pay rules where applicable.

Meal Periods

Unpaid meal periods must be at least <Minutes> minutes, uninterrupted, and completely duty-free.
If an employee is not relieved of all duties during a meal period, the time is compensable.
Where laws mandate specific meal break timing (e.g., a meal break by the end of the fifth hour), follow the stricter requirement. Missed, short, or late meal periods may require premium pay in some jurisdictions.

Rest Breaks

Paid rest breaks are provided consistent with local law (e.g., a paid <Minutes>-minute rest break for each <Hours> hours worked).
Rest breaks must be counted as hours worked and may not be combined with meal periods without legal allowance.

Travel Time

Ordinary commuting between home and the regular worksite is generally not compensable.
Travel between worksites during the workday is compensable.
Same-day out-of-town travel during normal work hours is compensable; travel outside normal work hours may be compensable depending on jurisdiction.
Overnight travel that occurs during normal work hours is generally compensable, even if outside the usual workday, while time spent sleeping in provided accommodations may be noncompensable if conditions are met.
When employees drive themselves at the request of <Company Name>, compensability follows local law; mileage reimbursement policies are separate from wage-hour compensability.

On-Call, Call-Back, and Standby Time

On-call time is compensable when restrictions are such that the employee cannot use the time effectively for their own purposes. Evaluate response time, geographic limits, and activity constraints.
Call-back pay is provided when employees are called back to work after leaving the worksite or outside scheduled hours, per local policy or CBA. Minimum pay guarantees may apply (e.g., <Hours> hours at applicable rate).
Standby assignments must be documented with expectations for response time and compensation arrangements.

Training, Meetings, and Lectures

Time spent in required training, meetings, or lectures is compensable.
Time may be noncompensable only if all the following are met:

Attendance is outside regular working hours
Attendance is voluntary
The event is not directly related to the employee’s job
No productive work is performed

Professional development sponsored by <Company Name> requires pre-approval to clarify compensability and expense coverage.

Remote Work, Mobile Work, and Flexible Arrangements

Remote and mobile work must comply with this policy. All hours worked must be recorded, including brief after-hours tasks.
Managers must avoid sending messages that prompt work outside schedules unless emergency operations require it.
Employees must track and record time spent on systems boot-up, security log-ins, and required administrative tasks that are integral and indispensable to the job.

Preparatory and Concluding Activities

Time spent on activities integral and indispensable to principal work (e.g., donning required protective gear, equipment checks) is compensable.
Reasonable walking time within the worksite may be compensable where required by law or where integral to principal activities.

Young Workers and Restricted Occupations

Additional restrictions apply to minors and young workers, including maximum daily/weekly hours, prohibited duties, and scheduling curfews as defined by <Country> and <State/Province> law.
HR must approve hires under <Age> and ensure required permits are obtained before work begins.

International and Multi-Jurisdiction Considerations

Local law addenda supplement this global policy. Where a local addendum provides more generous terms, the addendum prevails within that jurisdiction.
Currency, pay cycles, thresholds, and premium types vary. Total Rewards will maintain a jurisdictional matrix with overtime triggers, break requirements, penalties, and record retention obligations for each <Country> and <State/Province>.
Translation and works council consultation may be required in certain countries before implementation.

Systems Configuration and Payroll Integration

Configuration Principles

Configure the workweek and workday consistently in <Timekeeping System Name>, <HRIS Name>, and <Payroll System Name>.
Automate overtime triggers by jurisdiction using rule sets and employee location attributes.
Use pay codes to distinguish regular hours, overtime hours, daily overtime, double time, premium penalties, call-back minimums, and meal/rest premiums.
Set up earnings codes for nondiscretionary bonuses and enable regular rate recalculations.

System Configuration Checklist

Define workweek and workday parameters
Map employee home/work locations to jurisdictional rule profiles
Configure overtime rules for weekly, daily, and seventh-day triggers
Set meal/rest break tracking and premium pay rules
Enable exception reporting for missed punches and edits
Configure rounding rules and audit logs
Establish pay codes and earning codes for all premium types
Integrate approved PTO with timekeeping to avoid double counting
Configure regular rate calculations including bonus proration
Test scenarios including multiple premiums and shift differentials
Validate payroll outputs with parallel runs before go-live
Lock closed pay periods and control retro-pay adjustments

Data, Reporting, and Analytics

Produce weekly exception reports for approvals, missed breaks, rounding impacts, and overtime outliers.
Maintain dashboards showing overtime as a percentage of total hours by department, location, and cost center.
Track key metrics: average overtime hours per FTE, cost of overtime as <Percentage> of payroll, meal/rest premium incidence rate, and timecard approval timeliness.

Roles and Responsibilities

Total Rewards

Owns policy design, jurisdictional matrices, and exemption frameworks. Partners with Legal to interpret new laws and set pay practices.
Conducts impact modeling and advises Finance on budget implications.
Defines system requirements and acceptance criteria for overtime and premium pay.

HR Operations and Payroll

Configures systems, ensures correct pay codes, and administers timekeeping processes.
Runs audits, resolves exceptions, and ensures accurate and timely payroll for overtime and premium pay.
Maintains records and supports internal and external audits.

Managers and Supervisors

Plan schedules, approve time, and manage overtime responsibly within budgets.
Ensure employees take and record meal/rest periods as required.
Address unauthorized overtime through coaching while ensuring all hours are paid.

Employees

Accurately record all hours worked and report missed breaks or timekeeping issues.
Follow scheduling and pre-approval requirements for overtime.
Promptly review and sign timecards.

Legal and Compliance

Interprets laws, reviews policy updates, and advises on complex scenarios, investigations, and disputes.
Oversees response to governmental inquiries and ensures retention and production of records.

Internal Audit and Finance

Tests controls, verifies compliance with policy and law, and reports findings.
Monitors overtime trends against budgets and investigates anomalies.

IT and Systems Owners

Ensure system availability, data integrity, security, and access controls for time and payroll systems.
Implement changes in accordance with change-management procedures.

Implementation Guidelines

Phased Approach

Assess current-state practices, systems, and legal requirements across all covered jurisdictions
Design future-state policy rules, including workweek/day, triggers, premiums, and exception handling
Configure timekeeping, HRIS, and payroll systems and map pay codes to general ledger
Pilot with <Number> departments or locations; gather feedback and adjust
Train managers, employees, HR, and payroll with role-specific materials
Go live in waves, starting with lowest risk jurisdictions
Monitor, audit, and refine with a 30-60-90 day stabilization plan

Change Management Best Practices

Engage stakeholders early, including <Union Name> where applicable, local HR, and operations leadership.
Provide concise job aids with screenshots of <Timekeeping System Name> and examples relevant to each jurisdiction.
Establish a help desk via <Support Channel> with SLAs for time-sensitive pay issues.

Controls, Audits, and Record Retention

Key Controls

Preventive: System-enforced overtime calculations, required approvals before payroll close, and restricted access to edit timecards.
Detective: Exception reports for missed meal periods, excessive rounding, and edits over thresholds; quarterly audits of exemption classifications.
Corrective: Retroactive pay adjustments processed within <Number> pay cycles upon discovery of underpayment.

Record Retention

Retain timecards, schedules, and payroll records for at least <Years> years or longer if required by <Country> or <State/Province> law.
Retain exemption documentation, job descriptions, and salary basis records for at least <Years> years after termination.
Retain policy versions, approvals, and training records per <Company Name> records management policy.

Exceptions and Escalation

Requests for exceptions must be submitted in writing to Total Rewards with a business justification, duration, impacted employee population, and legal analysis.
Temporary exceptions require approval from Total Rewards and Legal; permanent exceptions also require approval from <Executive Title>.
Report suspected violations or underpayments immediately to HR or via <Hotline Name>. Retaliation for reporting in good faith is prohibited.

Review and Approval Process

Total Rewards reviews this policy at least annually or upon legal changes exceeding <Threshold> impact on compliance or cost.
Proposed revisions are drafted by Total Rewards, reviewed by Legal and Payroll, and approved by <Approver Title>.
Effective dates for revisions will allow for system updates, training, and communication lead times of at least <Number> days unless urgent legal changes require immediate implementation.

Metrics and Reporting

Target overtime ratio: Overtime wages not to exceed <Percentage> of total wages per quarter, adjusted for seasonal variability.
Approval timeliness: <Percentage> of timecards approved by deadline.
Compliance metrics: Meal/rest compliance rate above <Percentage>, rounding net impact between -<Percentage> and +<Percentage> of total hours, exception resolution within <Number> business days.
Audit findings: Zero material findings; corrective actions closed within <Number> days.

Glossary

Call-Back Pay: Minimum pay provided when an employee is called back to work after leaving the worksite.
Daily Overtime: Overtime triggered by hours worked beyond a set number in a single workday, where required by law.
Double Time: Pay at twice the regular rate for hours meeting specific thresholds under applicable law.
Grace Period: A limited window around scheduled time meant to manage clock variance, not to permit unpaid work.
Meal Period Premium: Additional pay owed when a required meal period is missed, short, or late in certain jurisdictions.
Neutral Rounding: A rounding method that does not systematically favor the employer or the employee.
Nondiscretionary Bonus: A promised or formula-based bonus that must be included in the regular rate calculation.
Regular Rate: The rate used to compute overtime, including certain earnings beyond base wages as required by law.
Seventh-Day Overtime: Overtime triggered when an employee works on the seventh consecutive day in a workweek under certain laws.
Shift Differential: Additional pay for working an evening, night, or weekend shift.

Communication to Employees and Managers

What This Policy Means for You

This section explains how overtime, timekeeping, and breaks work at <Company Name> in clear, practical terms. If anything here differs from a local addendum you received for your location, follow the addendum.

Recording Your Time

Accurately record the time you start work, the time you break for meals, the time you return from meals, and the time you finish work each day in <Timekeeping System Name>.
Do not work off the clock. If you are asked to start early, stay late, answer messages after hours, or do any work outside your scheduled time, record that time.
If you miss a punch or need to correct your timecard, submit a correction request with a brief explanation. Your manager will review and approve it.

Overtime Basics

If you are a nonexempt employee, you earn overtime when you work more than the limits set by your local laws. In many places, that is more than 40 hours in a workweek. Some locations also require overtime for long days or for work on a seventh consecutive day.
Overtime is usually paid at 1.5 times your regular rate of pay. In some locations, certain hours are paid at 2.0 times your regular rate.
Your regular rate may include things like shift differentials and certain bonuses. That means your overtime pay can be higher when those apply.

Getting Overtime Approved

Overtime should be approved by your manager ahead of time. If urgent work comes up and you cannot get approval in time, you must still record the hours you work and notify your manager as soon as possible.
You will be paid for all hours worked. If you did not follow the approval process, your manager may discuss scheduling expectations with you.

Meal and Rest Breaks

Take your meal and rest breaks as scheduled. Meal breaks are usually unpaid when you are fully relieved of duty. Rest breaks are usually paid and count toward your hours worked.
If your work makes it hard to take a break, tell your manager right away. If you miss, shorten, or take a late meal break, you may be eligible for premium pay depending on your location.

Travel and Training Time

Regular commuting from home to your usual worksite is generally not paid. Traveling between worksites during the day is paid.
Training that <Company Name> requires is paid. Optional training outside of work hours may or may not be paid depending on the situation. Ask your manager if you are unsure.

Remote and Mobile Work

When you work remotely or check messages on mobile devices, record the time you spend working. Short tasks add up and must be captured.
Keep your notifications in check outside work hours unless your role requires on-call availability. Ask your manager how to handle after-hours requests.

Questions and Support

If you have questions about your overtime eligibility, how to record time, or how breaks work in your location, contact <HR Contact/Email> or visit <Intranet Link/Location>.
If you believe your pay did not include all hours worked or the correct overtime, report it immediately to HR or via <Hotline Name>. You will not face retaliation for raising a concern in good faith.

Key Takeaways

Record all time worked, every day.
Take your scheduled meal and rest breaks.
Get overtime approved, but record it even if not pre-approved.
Ask questions when unsure. We are here to help.

This communication is a summary for employees and managers. If there is any difference between this summary and the full policy or a local legal requirement, the full policy and law will control.

Document Information:

Document Type: Overtime & Wage Hour Policies
Category: Compliance & Governance
Generated: August 28, 2025
Status: Sample Template
Next Review: <Insert Review Date>

Usage Instructions:

Replace all text in angle brackets < > with your company-specific information
Review all sections for applicability to your organization
Customize content to reflect your company's policies and local regulations
Have legal and HR leadership review before implementation
Update document header with your company's version control information
At bottom of the document you find a short example on how the content could be communicated to end-users, for instance employees.

This sample document is provided for reference only and should be customized to meet your organization's specific needs and local legal requirements.