A change in the way Scottsdale pays overtime to employees has drawn ire from police union representatives, who say the policy will hurt officers who frequently work beyond their normal hours.

Supporters of the new policy said it is a structural change that will lead to long-term savings.

Under the new policy, adopted on a 4-3 City Council vote last week, the city will pay employees for overtime based on hours worked during the week, rather than hours paid, starting July 1. For instance, if an employee takes a vacation day any time during the week but is required to work more than 40 hours, he or she will not receive overtime-premium pay until the hours actually worked exceed 40 hours.

Currently, employees receive the overtime premium once they exceed 40 worked and non-worked hours. Vacation, holiday time and sick leave are considered non-worked hours.

Mayor Jim Lane, who voted with the majority, said the savings "is something that accrues over from year to year and helps in sustainability as a structural budget change."

City officials project a savings of $800,000 in the next fiscal budget, which could be higher or lower depending on actual overtime. They calculated the savings using the actual paid amount for overtime last year determined from a review of payroll records, said Brent Stockwell, senior adviser in the City Manager's Office.

Stockwell stressed that the change affects only the overtime premium - the point when an employee starts earning time-and-a-half pay.

After voting down the measure several times, the council last week integrated the change into the city's tentative 2011-12 budget. The final budget is scheduled to be adopted June 7.

Under the new budget, city employees will pay a higher percentage toward their health-care premiums and merit pay raises are suspended for a third year.

Unlike other belt-tightening measures, Lane said the overtime policy "has no impact" on municipal services. He argued that employees should be compensated for overtime "because they've been working harder, working longer than others normally are."

James Hill, president of the Police Officers of Scottsdale Association, said the change will worsen the overall health of the police force.

Police representatives have argued that law enforcement will be the hardest hit because officers tend to work non-standard hours and more overtime.

Hill said a police officer who is ineligible for overtime but called in to work may be reluctant to answer the phone.

"Why would I come in on my day off, take time from my family, and not be compensated for overtime?" Hill said. "The people who are going to make the overtime are going to answer their phones."

Another drawback might be more employees working when they are sick, Hill said. If an officer took overtime and became ill later in the week, he or she would lose that overtime by taking a sick day, he said.

City Councilman Dennis Robbins previously voted against the change but supported it last week. He thought the overtime issue "was a good compromise" in place of salary cuts, as some council members proposed.

"Instead of cutting (pay) across the board, I thought this was a more specific change that will save us money," Robbins said.

He noted that as a businessman who owns three auto-service centers, his policy is to pay overtime to employees based on hours worked.

Councilwoman Linda Milhaven opposed the overtime measure. The city has made "significant reductions" in benefits while increasing health-care costs without the completion of a compensation and benefits study, she said.

The council recently ordered staff to analyzing the city's pay practices.

"We've done all of that without the context of the information we need to know whether or not (the overtime change) is appropriate or competitive," Milhaven said.

The federal standard is to pay overtime for hours actually worked, according to the Regional Office of the U.S. Department of Labor's Wage and Hour Division.