How Tax-Free Overtime Is Reshaping Private Security Staffing

A recent wave of state and federal legislation granting tax exemptions on overtime pay is making extra hours more appealing for hourly workers. While this may benefit individual employees, it presents a complex challenge for manned guarding providers, many of whom are already grappling with high turnover, rigid post requirements and limited scheduling flexibility. With guards increasingly drawn to jobs that offer greater control over their hours and earnings, private security firms must find new ways to manage staffing demands and workforce costs.

In this executive Q&A, James Benum, chief strategy and growth officer at Trackforce, a provider of workforce management software for the security industry, discusses how guard firms are responding to these labor shifts with smarter scheduling, better data and a more strategic approach to retention.

What operational or financial challenges does the overtime tax exemption create for manned guarding firms with fixed-rate contracts?

Fixed-rate contracts limit a firm’s ability to pass rising labor costs to clients, so any increase in overtime becomes a direct hit to margins. Non-billable overtime (NBOT) has historically been one of the few levers security firms can use to support workforce retention and meet coverage demands without renegotiating contracts. But with the new tax exemption making overtime more attractive to guards, firms face even more pressure to deliver on service expectations while absorbing the cost difference. This intensifies stress on budgeting, payroll forecasting and profit protection.

How does the manned guarding industry differ from other hourly-wage sectors when it comes to overtime pay and employee retention?

Unlike hospitality or food service, security firms can’t offer tips or flexible scheduling perks. Having no flexible scheduling may lead to burnout, as guards have to work long hours with no chance of having someone cover their shift if needed. While other industries may raise rates dynamically or pool gratuities, security providers are bound by fixed-rate contracts and strict post requirements. This makes, one could argue, guard roles less financially flexible and more operationally rigid, two key factors that fuel attrition and make retention much more difficult.

Given the industry’s historically high turnover, what specific guard behaviors or exit trends are you watching in light of the new tax policy?

We expect to see a spike in guards pursuing jobs that offer more control over their hours and earnings, including those in retail, valet, or delivery services. Early signs suggest that guards are more actively requesting overtime shifts, but in firms where that’s not available or compensated well, they’re quietly exiting. A rise in partial post coverage and shift swapping is often the first indicator that attrition is accelerating, something many firms should keep an eye on. 

Seasonal factors are also in play. With school out, some officers seek more flexible or short-term roles, and there’s growing demand for outdoor event security at concerts, fairs and festivals. These options offer more immediate financial upside and autonomy, making it easier for guards to walk away from traditional posts.

The financial fallout of tax-free overtime

What specific workforce technologies can help mitigate high turnover and rising labor costs in guarding operations?

Technology that automates core functions like onboarding, scheduling and post assignments play a big role in helping to mitigate turnover. Real-time mobile tools that help guards manage fatigue, flag issues, or swap shifts can reduce friction on the job as well. Integrations with different HRIS and applicant tracking systems also compress the recruiting cycle, making it faster to backfill vacant posts and more efficient to onboard replacements.

One unique area gaining more attention is lone worker protection. Many guards work solo, on overnight shifts, remote posts or isolated checkpoints, and the ability to monitor their safety in real time has become essential. Guard tour tracking, paired with features like geofencing, panic alarms, phone tilt alerts and danger zone timers, helps firms protect these workers, ensure accountability and respond quickly to incidents. This kind of tech enhances guarding safety, yes, but also signals to employees that their wellbeing is a priority.

How can automation — such as in scheduling and onboarding — relieve the operational burden caused by constant churn?

Automation was made to eliminate manual, repetitive admin work like assigning posts, creating schedules, or running background checks. This means when turnover hits, companies can hire, train and redeploy new guards faster, with less back-office burden. Templates for common posts, AI-assisted shift fills and prebuilt training modules can help SMB and enterprise organizations get over the learning curve for new hires, which helps ensure a continuity of service with fewer delays. 

Specifically in areas like scheduling and onboarding, automation reduces the manual workload that comes with constantly backfilling positions. When a guard leaves, automated systems can quickly assign shifts, fill posts based on availability, and trigger onboarding workflows for new hires. This minimizes delays, cuts down on administrative backlogs, and ensures that service levels stay consistent, even when turnover is high.

Turning to technology for workforce stability

How can security firms use operational data to show clients the impact of understaffing or turnover?

This is where the real value comes in. Firms can track and present data on guard absences, incident response times, or post coverage gaps to show how service quality is affected. When inefficiencies can be tied to specific metrics, like missed patrols, incomplete reports, or longer incident resolution times, this data builds a compelling case for where and why staffing levels must be adjusted and why current pricing may no longer reflect the true cost of coverage.

What are some examples of how data has been used successfully to justify updates to staffing terms or contract rates?

The security industry is so unique in this case, as it is slower than others to adopt modern tech into their operations. In several cases, firms have used tour performance logs and response time analytics to prove that fewer guards led to slower emergency response or increased safety risks. With historical data visualized over time, however, clients can see a direct correlation between staffing, service reliability and costs. This evidence has helped firms negotiate rate adjustments, add new posts, or win support for investing in hybrid solutions like remote guarding.