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In many industries, overtime is often treated as an easy way to cover shifts and staffing shortages. On the surface, it seems like a simple solution: have the employees already working for you complete just a few extra hours. However, what may seem like a simple solution at first can become a long-term financial and physical drain for both you and your employees.  

Fatigue, Errors, & Burnout – An Employee’s Intangible Burden

Studies have shown that employees who work between 50 to 60 hours a week will receive less than six hours of sleep per day. Long-term sleep deprivation can cause knock-on health effects related to increased cardiovascular and coronary heart diseases, sleep disorders, obesity, hypertension, and type 2 diabetes. Additionally, the exhaustion caused by sleep deprivation limits the quality, performance, and productivity of workers. 

Inadequate sleep causes employees to be less alert on the job and during critical moments. This can lead to a higher number of accidents, decreased concentration and reactions, and a reduced ability to retain information or new skills. Sleep-deprived employees often have reduced situational awareness and emotional capacity to handle their workload. 

“…sleep-deprived participants did not recognize how poorly they were performing: they tended to think they were doing better than they were (Van Dongen & Belenky, 2009).” – Quote from “Negative Impacts of Shiftwork and Long Hours” by Claire C. Caruso (2013) 

Surrounding issues can further worsen the effects employees face from sleep exhaustion. Existing problems with inadequate staffing, low-quality employee training, and confusing work schedules can greatly reduce the abilities of capable and experienced employees. 

Under some circumstances, certain employees may develop “burnout” in relation to their job and place of work. Burnout is often specific to an employee’s job and is caused by said employee experiencing long-term stressors (such as sleep deprivation) related to their work. Employees who experience burnout are 57% more likely to be absent from the workplace for two or more weeks and often face a higher risk for certain stress-related medical conditions. 

 “‘When workers are suffering from burnout, their productivity drops, and they may become less innovative and more likely to make errors. If this spreads throughout an organization, it can have a serious negative impact on productivity, service quality, and the bottom-line.’” – Quote from “Employers need to focus on workplace burnout: Here’s why” by the American Psychological Association (2023) 

Financial Costs, Throughput, & Absenteeism – A Company’s Tangible Consequences

Employees covered by the Fair Labor Standards Act (FLSA) are legally required to receive overtime pay (1½ times the employee’s regular rate of pay) after they have worked 40 hours during the work week. 

Financial losses from employee burnout can cost employers up to 2x the average cost of health insurance (per employee) and up to 17x the cost of employee training (per employee). In 2025 alone, employee burnout cost U.S. companies at least $5 million, most of which was attributed to absenteeism and presenteeism. 

Absenteeism can refer to employees being absent from work either often (but in smaller intervals) or for extended periods of time, usually in which the employee is unable to work. Presenteeism refers to when employees do come into work but are either sick, fatigued, or overworked, and are non-productive. 

“In a vicious circle, as a consequence of health problems caused by burnout, workers may not reach the desirable performance at work, which in turn may lead to increasing levels of emotional exhaustion [86, 99]. The worker’s weakened health along with his/her diminished functional capacity may lead to absenteeism, a great cause of concern for the worker and the organizations that has both social and economic consequences.” – Quote from “Physical, psychological and occupational consequences of job burnout: A systematic review of prospective studies” by Denis Albieri Jodas Salvagioni et al. (2017) 

Solutions to Overtime Dependency Aren’t Built Overnight

Fixing overtime dependency isn’t an issue that most companies can solve overnight. It’s an issue that is a symptom of larger operational and structural capacity issues in an operation. However, there are tangible steps companies take to begin tackling this issue head-on. 

Focus on having meaningful and in-depth discussions with your employees about the current overtime situation   

Where are they struggling, and how can you provide them with meaningful resources and assistance? Are there tools, training, or methods that can help your employees feel confident and safe at work? 

Review and adjust your shift work schedules

Consider adjusting the length of your shifts and implementing rotating shift schedules into your operation. Focus on creating regular and predictable shift schedules. This can provide you and your employees more flexibility when planning work availability, labor costs and demands, and rest/down time. 

Understand where more workers are needed and where current workers need additional training

While it may seem like a higher cost up front, having a reliable number of skilled workers who can complete their work during predetermined work hours is far more sustainable for you and your operation in the long run. Additionally, ensuring that all workers have the skills to competently complete their job, reduces the load on other employees. 

In Conclusion

Overtime can be a useful tool for handling an occasional surge in demand, but it shouldn’t be the system holding an operation together. When extra hours become routine, the added costs, fatigue, and potential for errors can create new problems instead of solving the original staffing shortage.  

Building a more sustainable operation takes time, but reducing your dependence on overtime can create a healthier workload for employees while helping your operation maintain productivity as demands change. Start by looking at where your team is consistently stretched thin and why.  

If labor challenges are limiting your operation, automation may also help you get more from the workforce you already have. Contact our warehousing experts to discuss where automation could support your operation or explore our other articles on labor and productivity.