By Patricia Collins, Esquire
On May 2, 2017, the House passed the Working Families Flexibility Act. The purpose of the Act is to give employees flexibility in how they choose to be paid for overtime: in wages or in compensatory time off. The Act crystallizes a tension I see often in my representation of employers.
Presently, the Fair Labor Standards Act (“FLSA”) requires employers to pay nonexempt employees overtime compensation for work hours in excess of 40 in a workweek. Employers cannot compensate employees for those overtime hours in compensatory time off (“comp time”). Such a policy violates the FLSA, exposing the employer to liability for the unpaid overtime hours as well as penalties and attorney’s fees.
The FLSA prohibition against payment in comp time is intended to protect employees from abusive overtime demands by employers. The statutory obligation to pay additional wages for hours over forty in a workweek, so the argument goes, forces the employer to base the decision to require overtime hours on business and financial considerations. The FLSA’s ban on comp time legislates a policy determination that offering comp time will not protect employees from abusive demands by employers.
Republicans this week argued otherwise. They argue that permitting employees to take comp time rather than payment for overtime work gives employees flexibility. Democrats who opposed the bill countered that the Act’s provision allowing employers the final say does not adequately protect employees.
Practically, the Act sits at the tipping point of many competing considerations: employers want to establish policies that comply with the law, protect the business, and benefit employees. Employees want flexibility, but they also need to be paid for their work. The reality is that banked comp time can be a liability for employers because there are jobs for which attendance is extremely important, and unscheduled or unpredictable time is off is sometimes expensive or interferes with the progress of work. Further, employees might not be free to use that comp time in the manner they would like if it interferes with the employer’s business. Most employers offer paid time off in a set amount, in order to create predictability as to an employee’s attendance. While this proposed rule might create flexibility and reduce overtime costs, I do wonder whether it is really a savings in the long run.
It will be interesting to see how the Senate balances these concerns, and whether employers will create policies that allow comp time. The bill now goes to the Senate – no word yet on whether they will vote on it. Stay tuned!