When it comes to paying hourly employees for all hours worked, the best policy is to fix any mistakes as soon as you can. Chances are, doing so will reduce your liability down the line.
Recent case: A police tactical team supervisor told his officers they had to work overtime on a “flextime” basis but without recording their extra hours. At first they complied. However, the practice—commonly known as comp time—was against department policy.
Some of the officers complained and the department immediately stopped the practice. Then it tried to calculate how much money the officers were owed. Based on logs and other records, it came up with an estimate and paid the officers.
They sued anyway, alleging Fair Labor Standards Act violations.
The court dismissed their case, concluding that not only had the department fixed the problem as best it could, but the officers didn’t have any evidence to show they actually worked additional hours they weren’t paid for. (Carmody, et al., v. Kansas City, No. 12-3051, 8th Cir., 2013)
Final note: So-called comp time, in which hourly employees work more than 40 hours in a week without being paid time-and-a-half overtime, is allowed only in very limited circumstances. It is never allowed for private-sector employees. In the public sector, such a program must be specific, all time must be carefully tracked and the time accumulated cannot exceed 160 actual hours worked except in limited circumstances.