(Editor’s Note. In efforts to reduce proposed labor rates in price sensitive competitions, contractors often turn to a major tool – uncompensated overtime (UOT). Since there have been some recent regulations addressing uncompensated overtime we thought this would be a good time to provide an overview on the subject, how DCAA and other government organizations view it and provide alternatives in how to treat it. The basis of our information is not one authority but stems from our long time study of the subject, experience as consultants and our working knowledge of how different government agencies view it.)

Under the Fair Labor Standards Act overtime must be paid to hourly employees whenever they work more than 40 hours in a week but not to salaried executive, administrative or professional employees even though they often work more than forty hours per week. The Act refers to hourly employees as "non-exempt" and salaried employees (those not paid overtime) as "exempt. Uncompensated overtime then refers to the work exempt employees perform above and beyond forty hours per week.

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