An old defense contractor I worked at did the similar things.
It was required by federal contracting rules/law/whatever that our timesheet reporting be accurate. The spirit of the law was probably "don't charge us for time you didn't work for us", which is a reasonable requirement.
The problem was when I worked 70 or 80 hour weeks. I didn't get paid any more, the company didn't get paid any more (I have no idea how or why, I didn't do project or program management, so I have only the most cursory knowledge of the different flavors of the main contract types in defense contracting). I was just trying to follow the law and whatever agreements I had signed. Seems pretty easy, pretty cut and dry, right?
Nope. I was working on two projects - we often did this. 90% on one, 10% on the other, usually in some sort of super specialist role where you help with one specific aspect you might be good at and free up other devs' time to focus on the actual dev, not things like Decision Analysis and Reporting plans for your CMMI compliance. The problem was the percentages were fixed. That means if my 90% project was in crunch time, and I worked a 70 hour week, even if I still did the normal 5 hours for the 10% project, it didn't work out that way. They normalized all the hours back down to 40, so the normal 5 ended up looking more like 3. Shouldn't be a big deal, but different contract types, different budgets not burning at the right rates, blah blah blah blah blah.
The result was they asked me to work a proportionately increased amount on the 10% project, as well. So not only was I putting in an extra 30 hours a week for no extra pay, no benefits, no tangible rewards in any way, but they wanted me to do even more of that on the other 10% too.