Important Change To Private Sector Comp Time Rules Possibly On The Horizon

Most employers are well aware that they must generally pay all non-exempt employees time and a half for all hours worked in excess of 40 hours in a workweek.  Most employers are also well aware that in the private sector there is no ability to allow employees to earn comp time instead of overtime pay.  The U.S. House of Representatives recently passed H.R.1180 (otherwise known as the Working Families Flexibility Act of 2017) which would change the comp time rules and make such options available in the private sector.

The legislation would enable U.S. businesses in the private sector to give workers paid time off for overtime hours in lieu of overtime pay.  In other words, instead of earning time and a half in the form of overtime pay, an employee could choose to earn comp time (paid time off) at a rate of time and a half for overtime hours worked.  The employee could bank this additional paid time off that could be used for any purpose in the future (vacation, medical appointments, or the like).  Importantly, an employer cannot mandate or coerce employees to choose comp time in lieu of overtime pay and there must be a voluntary, written agreement to accrue comp time.

Democrats, such as Elizabeth Warren, have come out against the bill claiming that since employers ultimately have the final say about when an employee can use paid time off, the bill allows companies to cheat employees out of overtime pay.  However, the bill specifically provides that employees must be allowed to “use such time within a reasonable period after making the request if the use of the compensatory time does not unduly disrupt the operations of the employer.”  Further, the bill also provides additional protections: (1) employees can accrue up to a maximum of 160 hours of comp time each year; (2) any unused comp time at the end of the year must be paid out 31 days after the end of the year; and (3) workers are free to cash out their accrued comp time whenever they choose.  Thus, it would appear the legislation gives employees and employers a tool of flexibility without any risk to employers or employees.

The U.S. Senate is likely to take up the legislation sometime in the next several weeks.  The White House has indicated that if the bill reaches the President’s desk that he would sign the legislation into law.

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