Companies often dislike overtime due to increased costs, decreased productivity, burnout, and legal risks, as it's more expensive than regular pay, leads to lower output per hour, risks employee health, and can result from poor planning or staffing issues, signaling deeper operational problems. While sometimes a necessary stopgap, constant overtime indicates a need for more staff or better management, as the initial productivity gains often vanish, replaced by higher error rates and fatigue.
Working overtime often isn't worth it due to serious health risks (stress, fatigue, heart issues), decreased productivity and focus, burnout, poor work-life balance, higher accident rates, and potentially diminishing financial returns from taxes, all while negatively impacting personal life, relationships, and overall well-being. While it offers extra pay, the hidden costs to health and personal time usually outweigh the benefits, especially if consistent, says this analysis from CreditNinja and this post on Indeed.
Working overtime regularly can also disrupt your work-life balance, lead to burnout or create health risks, such as sitting at a computer for long periods. Due to these risks, more companies are limiting the number of hours worked in certain positions, such as truck drivers.
However, Section 13(a)(1) of the FLSA provides an exemption from both minimum wage and overtime pay for employees employed as bona fide executive, administrative, professional and outside sales employees. Section 13(a)(1) and Section 13(a)(17) also exempt employees in certain computer-related occupations.
Significant effects include stress, lack of free time, poor work-life balance, and health risks. Employee performance levels could also be lowered. Long work hours could lead to tiredness, fatigue, and lack of attentiveness.
Too many hours reduce the amount of quality time employees spend with family members, which can result in stress and irritability. Sometimes employees try to compensate by sleeping less and “burning the candle at both ends.” To stay awake, they turn to coffee or other stimulants.
Can overtime hurt company performance? Yes. While it may help during peak periods, excessive overtime leads to burnout, fatigue, and high turnover, lowering productivity and morale over time. From a financial point of view, relying heavily on overtime leads to higher labor costs, which eat into profits.
Professional Response: "I have made prior commitments that I cannot defer. It's important for me to fulfill these obligations, and therefore, I have to decline the request for overtime work."
Of the 2,214 employees surveyed working 50 to 55 hours a week, they showed lower performance on vocabulary and reasoning exams. So, this (strongly) suggests that 25% beyond your regular 40-hour week is probably the acceptable limit.
Decreased efficiency
The intention behind overtime – to increase productivity – often has the opposite effect. Research from Stanford University showed overworking actually leads to decreased total output. Productivity per hour declines after employees work more than 50 hours a week and is even worse after 60 hours.
Overtime isn't taxed at a higher rate, but it can feel like it because higher earnings in one paycheck lead to higher tax withholding, potentially pushing you into a higher tax bracket for that income; however, new 2025-2028 federal legislation allows a temporary deduction (up to $12,500/$25,000) for qualified overtime pay on your tax return, reducing your overall taxable income for that period.
Yes, it's illegal to not pay eligible, non-exempt employees overtime (1.5 times their regular rate) for working over 40 hours in a workweek under the federal Fair Labor Standards Act (FLSA). Employers must pay this overtime, and employees can't waive their right to it, but specific rules vary by state, with some states like California requiring more.
If it's a 'no' —
I understand we're pushing hard to [project goal], and I appreciate the team's dedication. However, I won't be able to work overtime [day/date or time period].
Not only does overtime mean that employers pay more for less work, but it also contributes to an unhealthy workplace culture that leads to increased stress, sick days, and higher turnover rates.
The 8 and 80 overtime rule is a Fair Labor Standards Act (FLSA) exception for healthcare employers, allowing them to use a 14-day work period instead of a 7-day week, paying overtime (1.5x pay) for hours over 8 in a workday OR 80 in the 14-day period, provided there's a prior agreement with employees, offering more scheduling flexibility for 12-hour shifts.
Studies on the effect of long working hours on occupational injury have shown that overtime working increased the risk of occupational injuries [10,49,50,51]. Further, a study found that working 12 or more hours per day and 60 or more hours per week increased the risk of occupational injury [49].
The 3-2-1 bedtime method is a sleep hygiene technique to improve rest by creating a wind-down routine: stop heavy 3 hours before bed (food, alcohol), stop mentally taxing activities/work 2 hours before, and turn off all 1-hour before sleep, reducing blue light and stimulating the brain for better sleep. It's often part of the broader 10-3-2-1-0 rule, which adds no caffeine 10 hours prior and no hitting snooze at the end.