Hourly Employee

According to the US DOL, you can't prevent misuse of overtime UNLESS you a) lock-out, b) fire or c) suspend the Employee.

If an Employee works overtime, with or without permission, you as the employer MUST pay.

Also you may want to "require" overtime be "approved". I've worked in organizations where we had a general policy "No Overtime" expected or required unless pre- approved by dept Manager / Supervisor. Hope this helps.

I believe the question may relate to calculation of overtime ("OT"), as with all hourly employees the location and direction of their work is based on the employers definition.

I am not sure how other states define OT, however in California the calculation covers more than 8 hours in a day and 40 hours in a week.

Monitoring / controlling overtime is a separate issue; without specifics it is difficult to address the question. For example, is the employee in the field? Are there multiple 'jobs' or locations the employee is required to travel to?

Answers to these questions can help formulate the final answer.

I would suggest everyone read this:

US DOL Factsheet #23: Overtime Payments under the FLSA

http://www.dol.gov/whd/regs/compliance/whdfs23.pdf

Without a lot of details, the best advice we can give you is pre-approval of overtime and a lot of manager oversight. The other piece of advice is being able to monitor output. For office employees that process transactions: how many invoices do they process is an example. For factory employees, how many units are they producing?

Require supervisor approval of any overtime BEFORE it is incurred.

You have two separate discussions going on here that should not be confused:
1) Compensation is a legal question. Wayne has provided good guidance above on that and you will want to also investigate your particular state's rules. John mentions above that an 8 hr day is the breakpoint for OT premium in CA but here in IL, they follow the federal rules so an employee could work (2) 20-hr days and still not require OT.
2) Misuse of OT is a management issue. Policies requiring that OT must be approved do not eliminate your legal requirement for compensation, it only forces managers to address the policy violation after-the-fact much the same as a dress-code violation or any other similar undesirable employee action. The larger issue is why the employee needs to work OT. If it is driven by work load, consider redistribution to other employees. If it is driven by inefficiency or ineffectiveness, that's up to management to address. Consider an efficiency review, further training or, if warranted, termination. This does pre-suppose that OT is an undesirable event. In our company, OT is expected in several positions as the workload is sufficient to warrant the additional cost but the premium is not enough yet to warrant the addition of another employee.

The law in my state dictates that employees in my state receive one and a half time wages for overtime. It also dictates that overtime is based on a 40 hour work week – not an 8 hour work day like a few other states.

Your employees and your pay to them is set at a minimum by your state law, although you can offer a higher rate you would be violating state labor laws to pay a lower rate (1.43%).

I would request payroll reports by manager of the over time paid weekly or monthly. This would identify if there is a group abusing the overtime because a particular manager is not monitoring the over time. Then you have a conversation with the manager about the expectations of preserving the company bottom line and respecting use of time. I would also look at the lowest over time, because you want to be sure that a manager is not requiring work off the clock to make their numbers.

We have a group that we offer overtime to during a particular busy season and the group is a revenue generating group also paid a commission. During these rare, and planned events our group is paid overtime on the bonus and hourly wages, which is paid as a true up on the next payroll cycle because we aren’t sure what the OT on the bonus will be.

Karoline raises some excellent points regarding the management of OT within your functional area(s) by recommending reports be reviewed to ensure adherence to your established guidelines/goals, and that you have to make sure you true up the impact of commissions/performance based incentives onto the OT amounts paid. You should make sure that both are documented and clearly understood by all managers involved.