While the practice of compensatory time off (“comp time”) has long been standard for public sector employees, it is largely prohibited for private sector employers, often causing confusion among employers and employees alike.
On Tuesday, the House passed the Working Families Flexibility Act of 2017. This bill proposes to amend the Fair Labor Standards Act (FLSA) to allow private sector employees who work more than 40 hours in a workweek to choose between earning overtime pay in the same pay period, or “banking” those overtime hours to use as comp time in the future.
Currently, all employees who are covered by the FLSA (all non-exempt employees, in other words) and who are eligible for overtime pay must be compensated at a rate of one and one-half times their regular rate of pay for all hours worked in excess of 40 in a single workweek. (Individual states also have additional requirements regarding overtime compensation.)
If the new law were to become law as written, a covered, eligible employee earning an hourly regular wage rate of $10.00/hour who worked 45 hours in a workweek would be able to choose whether he or she wanted to be paid overtime wages during the same pay period, or to bank those hours at a rate of one and one-half times the amount of overtime hours worked for future paid time off. In this example, the employee would either be paid for those 5 extra hours at a rate of $15.00/hour ($10.00 x 1.5), or to bank 7.5 hours (5 x 1.5) of comp time for later use.
It’s important to note that if this bill did become law, it would only apply to states that do not have their own laws regarding overtime compensation.
The bill does include some provisions on how employees would accrue comp time hours, including capping the number of accrued comp time hours at 160 per employee. Additional provisions were included on how employers manage those banks, including one that would require employers to cash out unused comp time annually. Most importantly, however, employers would be prohibited from interfering with an employee’s right to choose or not choose comp time in any way.
The Act still needs to be passed in the Senate and then be signed by President Trump before it would become law. If it does get to the President’s desk, it’s almost a sure bet that it would become law, as the Trump administration has already publicly and formally expressed its support for the bill on its website. The main question is whether the bill will actually get there – while the bill would pass if the vote in the Senate comes down to party lines as it did in the House, Democrats may try to filibuster it.
While no employer will be required to offer comp time to their employees if the bill becomes law, those that do will need to think carefully about how they would manage comp time banks and accurately account for accruals. Employers that aren’t already using an online time and attendance system should consider investing in one or finding an HR provider that can offer one.
With automated, integrated time tracking, payroll and other HR technology platforms and decades of human resources and regulatory compliance experience, G&A Partners’ HR and payroll experts have the expertise and tools employers need to make complying with employment laws like the FLSA easy and effortless.
Board-certified employment law attorney Alexis Knapp will give attendees the inside scoop on what’s happening in the world of HR compliance.