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How To Manage Overtime During Busy Seasons: Legal Insights For Employers

As an employer, you must always carefully balance profits and expenses, hiring and firing, and the workloads that employees must manage. Finding the “perfect” numbers that allow your business to thrive while not having too many or too few employees and without any of those employees feeling overwhelmed or underworked can often make you feel like you are walking a tightrope and could fall off at any second. This can be particularly difficult when your business has busy and slow seasons. You cannot hire and fire people constantly, so instead, you turn to the alternative that many employers use: overtime. 

Having workers work more than their standard number of hours in a week comes with its risks, however. If you do not comply with all the state and federal legal requirements, you may find that the extra hours cost you more than what shows up on the payroll records. At Schwab & Gasparini, our experienced labor and employment attorneys may be able to assist you in ensuring your employees are classified and paid correctly and that your policies are clear and in compliance with all the appropriate laws. Call our Syracuse office at (315) 422-1333, our Albany office at (518) 591-4664, or our White Plains orHudson Valley offices at (914) 304-4353 to schedule a consultation.

Understand State and Federal Overtime Requirements

The first step toward ensuring legal compliance with overtime requirements is being familiar with all state and federal overtime requirements. Federally, the Fair Labor Standards Act (FLSA) establishes a federal minimum wage that workers must be paid, including rates for overtime. New York State Minimum Wage Orders dictate specific requirements surrounding overtime statewide. 

Federal Requirements

The FLSA mandates that overtime pay is required for all hours over 40 a non-exempt employee works in a single workweek. This law also mandates that standard overtime pay is one and a half times the employee’s regular rate of pay. There is no federal limit on how many hours an employee over the age of 16 can work in a workweek.

Additionally, FLSA indicates that employers are not required to pay overtime for hours worked on weekends, holidays, or regular days of rest, unless those hours are overtime. In other words, if an employee’s workweek includes the weekend and they only work 40 hours, they do not get paid overtime, but if they work Monday through Friday for 40 hours and then work eight hours on Saturday, they must be paid overtime for those hours on Saturday. 

State Requirements

The New York State Minimum Wage Orders dictate state law regarding overtime pay. There are specific orders for the hospitality industry and fast food workers, farm workers, non-profits, and the building service industry. Most other businesses will fall under the miscellaneous industries category. Like federal law, New York requires employers to pay employees one and a half times their regular pay rate for overtime, and counts any hours over 40 as overtime.

However, New York also has an additional rate for split shifts and spread of hours that are often confused with overtime. This additional rate is paid whenever the employee works, has a lengthy unpaid break, and then returns to work to finish their shift. This is called a split shift, and if it the hours from the start of the first part of the shift to the end of the second part of the shift is more than 10 hours, it is subject to the spread of hours. Under this rate, the employer must pay one additional hour at the basic minimum hourly wage. This applies even if the worker typically makes more than the minimum hourly wage. This is not overtime, and should not be confused with overtime. Workers may work less than 40 hours and still be entitled to split shift or spread of hours pay.

Federal and State Exceptions

While the FLSA and New York State Minimum Wage Orders both mandate overtime, including defining what is considered overtime and how much employees are to be paid for it, there are a few exceptions. For example, live-in domestic workers are entitled to overtime after working 44 hours in a workweek, while farmworkers are eligible after 60 hours in a workweek. 

Additionally, some industries have industry-specific overtime rules. For example, due to the nature of operations, the healthcare industry often uses an “8 and 80” overtime system which allows employees to be paid overtime for any hours exceeding eight in one day and 80 in a 14-day period. This requires a previous agreement between the employer and employee. Employers who are uncertain whether there are industry-specific rules may want to consult with an attorney to learn more about any overtime rules that are unique to their industry.

Establish Clear Overtime Policies

To ensure compliance with overtime regulations, employers should establish clear policies. These policies should be written down, and should cover when overtime is needed, who approves it, compensation amounts and methods, any limits, and notification procedures for mandatory overtime (how employees will be notified of mandatory overtime and how employees should notify the employer if they cannot work overtime). Once these policies are written, employers may want to have an attorney review them to ensure that they comply with all state and federal laws. 

Next, employers must communicate and share these policies with their employees. This includes putting them in an employee handbook or other method of providing them to new hires, as well as distributing the policies to existing employees. The policies should be updated as needed to reflect any legal or organizational changes that occur. Finally, employers should train managers and Human Resources personnel on overtime rules, employee classification, and scheduling to ensure everyone who may be responsible for assigning or scheduling overtime understands the requirements and can take them into account when making these decisions. 

Manage, Control, and Record Overtime

Like most other parts of business, employers are required to maintain accurate, detailed payroll records that show employees’ rates of pay, total hours worked each day and week, overtime hours worked, and overtime rates of pay. There are several things that employers can do that allow them to maintain these records while also controlling and managing overtime. 

Establish and Maintain a Consistent Workweek

The FLSA indicates that an employee’s workweek is defined as a predetermined and continually recurring period of 168 hours, or seven consecutive 24-hour periods. Many employers opt to follow a Monday through Sunday workweek for ease, but it can also be Friday through Thursday or any other consecutive seven 24-hour periods that suit the employer’s needs. Once this workweek is established, it must then be maintained. This means that the employer cannot constantly redefine what a workweek is. This does not necessarily prevent the employer from changing their workweek if business needs dictate, but changes must be considered permanent rather than something the employer can experiment with. 

Use Time-Tracking Systems

Time-tracking systems can reliably and accurately track employee hours in real-time. Quality time-tracking systems can record start and end times, paid and unpaid breaks, regular hours worked and overtime hours worked. These systems can automatically record this information, relieving employees of tracking their own hours and payroll of having to confirm the information. This can also prevent dishonest employees from lying about their hours to get overtime pay they are not entitled to. All of these benefits can help ensure compliance with the laws and also save the employer time and money. 

Review and Audit Time Records and Payroll Regularly

Whether the employer uses an automated time-tracking system or relies on employees using timecards or badges to track their own time, employers should review and audit the time records and payroll regularly. Technology can make mistakes, as can humans. Whether the time-tracking system makes an error or a human eye misreads information, incorrectly classifying or paying an employee can result in significant legal trouble. If an employer catches these mistakes through an internal audit, they can potentially correct the mistake before it becomes a legal issue, or they may be able to reduce the penalties they may face by correcting the error and self-reporting to the authorities. 

Forecast Workloads

While brand-new businesses may not have information to help them determine their busy and slow periods, they may be able to look at industry trends to see what other businesses in their industry experience. Once they have been in business for a year or two, they can then look back on their own records and take note of these patterns to know when things are busier or slower, as well as what might be considered “normal” for them. 

Once this historical record is established, employers can forecast workloads. This information can allow them to adjust staffing appropriately, including making scheduling changes, authorizing overtime, or hiring more temporary or permanent employees. While forecasting workloads is not a perfect science, as the economy and trends can influence what happens in a given time period, it should be useful in allowing the employer to make adjustments that ensure they comply with the law, whether their employees are working overtime or not. 

Cross-Train Staff for Multiple Roles

Most people have either had their own experience or have known someone whose department was working significant overtime while another department in the same business was working normal hours. In some of those instances, the employees working overtime are exhausted and overworked from working too many hours. This can be mitigated by cross-training staff to be able to work in multiple roles. This allows employees in a department that does not need to work overtime to work overtime in another department that does, reducing the workload on those employees. In some cases, one department may be working overtime while another has no work, and this cross-training can allow the department with no work to keep working while allowing the department working overtime to cut back on those additional hours. 

Schedule Staff Effectively and Efficiently

Employers may also consider using scheduling software to assist them in scheduling effectively to minimize overtime during peak periods. Some scheduling software will use data analysis and automation to optimize scheduling based on historical data and real-time insights. This allows the software to suggest how many employees to schedule, including the specific hours they should be scheduled, to ensure the employer has the right number of employees covering any shift. In cases where overtime will still be needed, the software can often identify this need and estimate how much overtime will be needed.

Employers can also use this software to set overtime rules and generate reports to forecast and manage overtime costs effectively. While this may not reduce overtime or the costs associated with it, it may make it easier for the employer to ensure they are in compliance with state and federal regulations. 

Consider Offering Flexible Scheduling Options

Many employers may prefer the consistency of clear, strict schedules where everyone on a shift or in a department starts and ends at the same time. While this may be more convenient in many ways, it can limit creative solutions to reducing or eliminating overtime. Consider offering flexible scheduling options such as staggered shifts, compressed workweeks, or flexible schedules. Most people have a time of day when they are most productive or would most like to work, and flexible scheduling options may allow them to indulge that preference while meeting or even exceeding business demands. Employers may find that their employees utilize flexible scheduling to be more productive in a shorter period of time, eliminating overtime and saving more than just overtime pay. 

Hire Temporary Staff During Peak Periods

Employers who forecast workloads will begin to see patterns about when the business is busiest and when it is slowest. In some cases, they may notice that there is only one season, such as summer, where they are at their busiest. They may even discover that it is only a short period, such as the time between Thanksgiving and just after the start of a new year, where they experience a peak period. While planning for overtime during these periods is one way to manage the increased workload, another possibly more cost-effective option is hiring temporary staff. 

Set Reasonable Limits on Overtime

To avoid burnout and control costs, employers should set maximum limits on the amount of overtime employees can work. They should ensure that employees, management, and payroll staff are all aware of these limits and if an employee is nearing the limit, take steps to reduce the employee’s workload. Additionally, they can also delegate and distribute workloads more evenly among employees to ensure no single employee is working overtime more than the others and potentially reduce the amount of overtime worked in general. 

Automate Tasks for Increased Efficiency

Employers can also audit the workplace and look for repetitive tasks that can be automated to improve efficiency and reduce the need for overtime. While there may be an initial cost associated with this automation, it is likely to save the employer significant money in the long run. Employers can also ask employees to suggest repetitive (or other) tasks they would like to see automated. While some employee suggestions may not be feasible, often the people performing these tasks each day will know exactly where time and money can be saved. 

Mitigate Risks

Employers also need to take steps to mitigate any risks related to overtime. This includes making sure employees are correctly classified, ensuring compliance when state or federal overtime laws change, and consulting with legal counsel when in doubt about compliance. 

Exempt Vs. Non-Exempt Employees

Non-exempt employees must be given overtime pay for any hours in excess of 40 that they work in a single workweek. Exempt employees are generally not entitled to overtime pay. While misclassifying an employee as non-exempt and paying them overtime when they should have been exempt is not necessarily a problem, misclassifying an employee as exempt and not paying them overtime can result in back pay liabilities, high penalties, and possible legal action. 

Requirements to Be Classified as Exempt

Job titles are not necessarily indicative of whether an employee is exempt. There are five categories of employees who typically may be exempt: administrative, executive, professional, computer workers, and outside salespeople such as door-to-door salespeople. However, whether they fall into one of these categories or not, the employee must meet the minimum salary threshold and satisfy duties tests to be considered exempt. There are additional employees who can be exempt, so employers should consult with legal counsel at Schwab & Gasparini to ensure they have correctly classified all employees. 

The New York City Bar explains the minimum salary thresholds that an employee must make to be considered exempt. In New York City, Nassau, Suffolk, and Westchester counties, the minimum is $1,237.50 per week in 2025, and increases to $1,275 per week on January 1, 2026. In the rest of New York state, the minimum salary threshold is $1,161.65 per week in 2025, and increases to $1,199.10 per week on January 1, 2026. 

Additional Considerations

When ensuring compliance with overtime regulations, employers must also be mindful that while New York has no maximum limit on how much overtime an employee can work, the employer must pay an appropriate overtime rate for all overtime worked, even if they did not authorize the extra hours, if they knew or should have known that the employee was working. 

Additionally, all overtime wages must be paid by the next regular payday after the period during which the overtime was worked. Employees cannot waive their right to overtime pay, either. Employers cannot ask them to waive it entirely or in exchange for something else, such as additional vacation hours or other perks or benefits the employer may wish to offer. While the employer can offer these perks and benefits, they must be in addition to overtime pay, not in lieu of it. 

How a New York Employment Attorney Can Assist You

Payroll can be a complex issue. When you include overtime and the regulations around it, including classifying employees and paying them correctly, it would be easy for an employer to make a costly mistake. An experienced labor and employment attorney with Schwab & Gasparini may be able to assist you in creating clear policies, ensuring your employees are properly classified, and correcting any mistakes you may have discovered in your records before they become bigger issues. Call our Syracuse office at (315) 422-1333, our Albany office at (518) 591-4664, or our White Plains or Hudson Valley offices at (914) 304-4353 to book your consultation and learn more about complying with federal and state law when your employees are working extra hours.

Mon Aug 11 2025, 12:00am