Blog Layout

Overtime in Manufacturing

Chris Mead • Dec 11, 2022

Overtime.  Some love it.  Some hate it.  However, even  those that love it have limits.

Since the pandemic started we have seen a number (almost all) manufacturing companies rely on overtime to deal with staffing shortages. However, in many cases, we are seeing excessive overtime increasing those shortages. With attendance being most companies' #1 reason for termination.


While attendance has long been the #1 reason for attendance terminations in manufacturing the current environment shows that something needs to be done as an industry to maintain employees. We have put together the following recommendations to reduce the reliance on overtime in manufacturing.


What are employees saying about OT?

While we all (yes, your employees understand) that Overtime is a necessity there are a few things that become apparent in our conversations (keep in mind that this isn't just with hourly employees but salaried supervisors).

  1. There are 'lies' that are told about OT
  2. OT and Attendance policies are too strict (for the employee)
  3. There is no additional benefit other than OT wages

Let's take a moment to dig into each of these. And while the conversation shouldn't be surprising it needs to be said.


Lies about Overtime

Most of us in leadership roles have lied to an employee once if not more. However, most of the time the lying isn't intentional. For example, we fall behind on production and need OT to catch up. Employees ask "how long should we expect to work OT" and we may not have a direct answer but we say something like "this is a temporary need for us to catch up on production" or "we are entering our peak season". In some cases, these are true, however, in many of our conversations we are seeing OT that has lasted for 6 months or more. Employees that are working 70+ hours per week in the manufacturing sector. This is a 10-12 hour shift 6-7 days per week.


OT and Attendance Policies are too Strict (on the employee)

Again, most employees understand that OT is a part of doing business and having a job. However, the communication behind OT as well as the expectations of OT seems to always be to the benefit of the employer and not the employee. Specifics issues around OT and Attendance policies from employees:

  • No minimum time for notification of OT
  • No limits to how much OT is worked without time off
  • No additional provisions around vacation or attendance for significant increases to work schedules

Think about it a regular full-time employee works 2080 hours per year (40hrs x 52 weeks). When employers require more overtime there are usually no concessions to vacation or attendance policies. Additionally, company overtime policies usually have no reference to a 'minimum notification period' or a 'maximum number of mandatory OT hours' before 'mandatory time off' is granted.


No Additional Benefit for Working OT

While all companies have to follow federal overtime laws in the US as well as any state laws depending on where they operate employees are frustrated that it only comes down to pay. What are employees looking for?

  • Additional Time Off
  • Better Benefits
  • Better Working Conditions


Possible Solutions

Remember that everything should be in balance. The best solutions usually put the employee and the employer on equal grounds for responsibility.


Check Your Policy

We recommend the following provisions be in each policy:

  1. Overtime Policy
  2. Working Hour Policy
  3. Vacation Policy
  4. Attendance Policy
  • Overtime policy has a minimum notification period before holding employees accountable.
  • For example: Employees will be given a notice of 72 hours before being required to work mandatory overtime.
  • Additionally, you could add in additional provisions such as: Employees will be given a notice of 72 hours before being required to work mandatory overtime, should a notice of fewer than 72 hours be given employees will be entitled to double time for hours worked.
  • Working hour policy has a required time off between shifts as well as a maximum number of hours worked within a specific period
  • For example: Employees will only be allowed a maximum of 240 working hours in 30 days before they are given a mandatory 72 hours period off work. 72 hours off work will reset this 30-day clock.
  • This comes out to 4x60 hour work weeks, but may be less if overtime is excessive such as 6-7 day work weeks of 10-12 hour shifts.
  • Give additional benefits based on hours worked.
  • Adjust Vacation policies to scale for overtime
  • Look at your vacation policy. Does it allot hourly workers a flat rate of vacation based on a timeframe (such as 40 hours per year)? Instead base this on an accrual of hours worked.
  • Example:
  • 2080 hours per year gains 40 hours of vacation
  • 40/2080 = .0192 (round to .02)
  • Employees earn .02 hours of vacation for each hour worked.
  • Award vacation accruals on a 'per payroll' basis. (.8 hours of vacation per week based on 40 hours)
  • The same could be done to provide unpaid time off which could go to replace employee attendance points. This is usually done at a lower accrual ratio of .01 resulting in 20 hours of unpaid time off per year.
  • Adjust Attendance Point Policies to scale for overtime
  • If you measure attendance based on 'points' it's important to scale this based on expectations. Attendance programs usually allow 5-10 absences per year as long as the employee gives advance notice. Based on 40 hours per week this allows 1-2 weeks per year for an employee to miss work.
  • However, if this is what was allowed for 40 hours, how do we scale when it comes time for 60-70 hours regularly? Well, we see 2 options:
  • Allow for 'point forgiveness' based on perfect attendance monthly.
  • Move to a UPT program instead
  • Increase points for extended periods of overtime
  • We prefer the UPT method as it automatically scales based on hours worked without additional management.


Embrace the 'gig economy'

Many of us have heard of the 'gig economy'. Several businesses are almost exclusively 'gig' based; Uber, Lyft, UpWork, etc. These jobs allow people to have a certain amount of 'freedom' in their schedules by setting their hours, projects, etc. Can this be applied to manufacturing? The short answer is 'YES'!


We will write a more detailed article on this at a later date. Embracing the gig economy is a great way to help control overtime hours. Our top 2 techniques for applying a 'gig economy' model in manufacturing are:

  1. To cover for absences
  2. To increase staffing on weekend shifts to give full-time regular employees time off.
  3. Catch up on 'small' tasks


Cover for Absences

Think about this, on any given day in manufacturing you have employees call out of work which will decrease production or you have other tasks that may detract your full-time workforce from their specific jobs (think housekeeping duties around the facility or other 'small' but important tasks). What if you maintained a part-time workforce that could 'sign-up' for these as they are posted.


For example, you need 50 employees on a 12-hour shift and have 2 callouts. What if you could post these 2 spots to a 'gig' workforce that allows you to backfill these 2 absences with minimal work? Say a supervisor posts these shifts and they are available for 2 hours after the start of a shift. Having 10 hours of production in most cases is better than 0 hours from a callout.


Increase Weekend Staffing

Post weekend positions ahead of time to allow full-time employees to take time off. Posting weekend roles to these 'gig' workers will help you control overtime as well as give your full-time employees a much-deserved and needed break.


Catching up on 'small' tasks

There are several 'small' tasks that we skip or shortcut every day in manufacturing. Having a workforce that could 'flex' to fill these jobs such as housekeeping for specific areas of the plant or other 'small' but important tasks could also be beneficial as it prevents you from taking your experienced employees away from their primary duties.


Considerations

A few things to consider when using a 'gig economy' setup to reduce overtime in manufacturing:

  1. Treat them like regular employees, they are not in most cases contract workers. If you want to make them contract workers please consult an attorney.
  2. Make them part-time employees and limit their hours per week to 24 hours. This way you provide separation between your full-time and part-time workforce in terms of benefits. 


Connect

By Chris Mead 15 Nov, 2023
Start early
picture of money relating the cost of vacancy to recruiting and recruitment issues
By Chris Mead 23 Oct, 2023
The Cost of a Vacancy in business costs more than some would give credit. inefficiencies in recruiting can multiply these costs. Having a plan and a partner to control these costs is instrumental to the organizations success.
Share by: