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Company Overtime Policy

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Company Overtime Policy: Free Template

If you’ve ever worked in the corporate world, you’ve probably heard about company overtime policies. They’re usually found in the employee handbook, and they’re incredibly important because they ensure you’re paid fairly when you’re working those extra hours beyond your regular schedule.

So, what’s an overtime policy? Well, it’s a document that spells out when and how you’ll get paid if you work more than your standard hours. It sets the ground rules so everyone knows what to expect.

But here’s the thing. Overtime policies aren’t just there for employees. They’re also there for employers, helping them stay within the law and avoid any potential disagreements or even court cases over pay disputes. It’s a win-win situation for everyone.

company overtime policy template

What Is Company Overtime Policy

You might be wondering, “What is a Company Overtime Policy?” Well, you can think of it as a set of guidelines that helps a company define overtime and explain how it’s handled.

Just like most things in life, not all overtime policies are created equal. Some might pay one and a half times the regular rate for any hours worked beyond the usual 40 in a week. Others might have different rates for weekends, holidays, or night shifts. The policy could also include how to authorize overtime so it’s always clear when those extra hours are approved and on the record.

The policy is there to clear up any confusion. It lets you know precisely what counts as overtime and how much you’re going to be paid for it. So, if you’ve been putting in some late nights or early mornings, you’ll know exactly how that translates into your pay. It also helps companies adhere to laws about maximum work hours and overtime pay.

It also helps to protect a company by ensuring they’re operating within the boundaries of employment laws. So, whether you’re an employee clocking in the extra hours or an employer wanting to run a tight ship, a good overtime policy is a must-have.

Why Should You Use a Company Overtime Policy

So, you might ask, “Why should I bother using a company overtime policy?” There’s actually a multitude of reasons, whether you’re an employer or an employee.

For starters, if you’re an employee, having a solid overtime policy is like having a trusty roadmap. It clearly shows you how extra work hours translate into extra pay. No surprises, no confusion. You know what to expect if you’ve been burning the midnight oil or clocking in extra early.

Now, if you’re an employer, an overtime policy is like your trusty compass. It guides your actions and helps ensure that you’re complying with local labor laws and regulations. This is crucial in preventing any misunderstandings or disagreements with employees over extra hours worked, and it can even help protect you from potential legal issues.

The company overtime policy importance extends beyond simply keeping track of employee hours, because having a well-crafted policy document also signals a fair and transparent work environment. It tells your team that you value their time and effort and that you’re committed to treating everyone with fairness. This can help build trust and foster a positive culture.

What Are the Benefits of Having a Company Overtime Policy


With a well-defined policy, everything is out in the open. You know exactly how those extra hours will boost your pay, no surprises.


An overtime policy ensures everyone is on the same page. It’s the same rules and the same rate for everyone in each pay grade or seniority level.

Legal protection

For employers, having a solid overtime policy helps you stay on the right side of the law, avoiding potential legal disputes.

Management tool

It’s also a handy tool for keeping tabs on overtime work. You can manage your workforce better, prevent burnout, and keep your budget in line.

Company values

A clear overtime policy is a reflection of your company’s commitment to fairness and employee well-being. It builds trust, boosts morale, and can even attract quality talent to your company.

FAQ About Company Overtime Policy

A mandatory overtime policy is basically a company’s rule book that outlines when it can ask employees to clock in more than the usual 40 hours a week. Generally, the extra time worked should be compensated at a rate of 1 1/2 times the usual pay, with extra health and safety considerations in place.
A quick and easy way to create a company overtime policy document is to grab a professionally made template like the one on this page and tweak it to fit your company’s needs. Or feel free to use it as a base to write your very own policy from scratch.
In the U.S., the rules for overtime work are set by something called the Free Labor Standards Act (FLSA). This act states that any hours worked over the regular 40-hour work week should be paid at 1.5 times the normal rate. Working on Saturdays, Sundays, or holidays doesn’t automatically mean you get paid more unless it pushes your total hours over the 40-hour limit.

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