You might already be aware of the risks of excessive overtime on employee health and overall productivity. Then there's employee overtime that seems unreasonable. On its face, these are overtime hours that should not pass any smell test and they usually result from a combination of timesheet fraud, poor time tracking and monitoring systems.

LADOT Audit Uncovers Millions in Overtime

In May 2015, the office of Los Angeles City Controller Ron Galperin released the shocking findings of its audit of the L.A. Department of Transportation (LADOT). The audit was triggered by an anonymous tip alleging overtime abuse.

Focusing on the LADOT’s paint and sign division, the audit found “staggering” amounts of overtime that ultimately cost the city $3.3 million in a single fiscal year. The LADOT paid out more over time in 2013-2014 than any other city department, with the exception of the Fire Department.

The Risks of Excessive Overtime

On the surface, you might think of overtime as helpful to your workers and your company. After all, it provides flexibility so you can adapt to day-to-day changes in workload, product or service demands. It also helps you handle unexpected absences without the need to hire more staff. For your employees, it allows them to make more money.

However, excessive reliance on and use of overtime comes with big risks. Global workforce performance and safety management firm Circadian identified five major risks of excessive overtime.

There are stories every week of how companies get sued because they violated overtime laws. Then there are stories that really turn your head. This is the story of how major restaurant chain, “Ruby Tuesdays,” brazenly violated overtime rules in several ways.

Ruby Tuesday’s managers apparently thought they could avoid overtime liability by using a scheme that discouraged proper overtime documentation by employees. Ultimately, a class action law suit against the company cost them $3 Million (a lot of legal fees) and bad publicity with customers, current, former and potential future employees.