Benefits Insights, Summer 2017
On May 2, the House of Representative passed H.R. 1180, the Working Families Flexibility Act of 2017, which proposes to amend the Fair Labor Standards Act (FLSA) of 1938 to permit private-sector employees to “bank” overtime hours for later compensated time off. The bill is intended to help American workers balance the demands of family and work by giving them the flexibility to earn paid time off, which they could then later use for any reason. The bill extends to private-sector workers a choice that public-sector employees have long practiced.
Under the bill, employers must offer their employees the choice of paid time off instead of cash payments for overtime hours. If an employee were to choose the compensation time (comp time), he or she would receive one and a half hours for each hour in which overtime compensation is required under the FLSA. For example, an employee who works 50 hours in a workweek could receive overtime pay for those ten overtime hours or opt to take 15 hours of comp time for later use.
To be eligible for comp time, employees must have worked for the employer for at least 1,000 hours for a continuous 12-month period. Employees wishing to bank hours must enter into a written agreement with their employer. Once earned, employees will be able to use their comp time when they choose as long as the leave is not overly disruptive and they provide reasonable notice. However, no more than 160 hours may be accrued in a given year, and the employer must monetarily provide any unused comp time.
In its current form, the Act contains protections to prohibit employers from coercing their employees to accept compensatory time instead of overtime pay, as well as aiming to ensure that employees can continue to choose overtime pay. The bill, however, does offer the employer the option to discontinue its comp time program with 30 days notice. Similarly, employees may request a payout of their accrued, unused comp time, giving employers 30 days in which to make these required payments.
The bill passed the House and is now headed to the Senate for consideration. Should the bill become law, it could have far-reaching impacts on virtually all employers in the private sector.