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Overtime is the period when an hourly wage earner works beyond his or her scheduled time, usually for an incremental boost in pay. State and federal employment laws govern how overtime can be used.

Overtime is a useful tool for managing capacity spikes. When a few extra orders come in on occasion, it makes sense to use overtime to handle the extra work.

Overtime is also useful to manage temporary increases in businesses. A single large contract or a seasonal surge both warrant overtime as a strategy. Using overtime in this way prevents the need to expand and build potentially expensive capacity.

Some employees value overtime; some hate it. Still others like it—but only at certain times. For that reason, it can be difficult to find an overtime strategy that doesn’t diminish job satisfaction for at least part of the team.

Managers should be careful about overusing overtime for long periods because it can wear out a team and make them less effective. Leaders should search for alternatives when overtime becomes a constant way of life at a company.

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