Will comp time come to the private sector?

Mike Staebell, Iowa Wage & hour watch, Iowa employment & labor law, Dickinson Law Firm, Des Moines Iowa

Posted on 05/15/2017 at 12:00 AM by Mike Staebell

There’s been a lot of buzz lately about the expansion of comp time. What’s the buzz about? Under Fair Labor Standards Act (FLSA) provisions that have been in effect for more than 30 years, overtime eligible public sector employees have had the option of receiving compensatory, or comp time, in lieu of pay, when they work overtime (more than 40 hours in a workweek). These employees may bank the comp time, which is awarded at 1.5 times the number of overtime hours worked, and use that accrued comp time as paid time off in future weeks. But the same has not been true for employees of private employers, who must be paid overtime and cannot opt for comp time. 

Enter H.R. 1180, titled the Working Families Flexibility Act of 2017, which passed the House of Representatives on May 2. Under this legislation, private sector employers could also give workers paid comp time instead of paying overtime wages.  The House vote was 229 to 197, with no Democrats voting in favor. The measure now passes to the Senate for consideration.  Will the comp time rules change? We don’t know yet. How might comp time change? Read on to find out.


Summary of the Bill

In addition to allowing private sector employees a choice between cash wages or accruing comp time for overtime hours worked, the bill would require a written agreement between employer and employee for that substitution. Current public sector comp time plans don’t require such a written agreement, and in practice the government employer can unilaterally impose comp time on its employees. 

Private sector employers would be prohibited from intimidating, coercing or forcing employees to accept comp time instead of cash wages, and violators would be required to pay employees double the amount of wages owed. That should be a major incentive for private employers to avoid attempting to influence employees’ choice regarding the comp time option.

Existing FLSA overtime rules are not changed under this legislation, including the requirements that overtime rates kick in after 40 hours worked in a workweek, and the fact that overtime pay or comp time must be 1.5 times the excess hours worked.  

The bill states that private sector employees may use accrued comp 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.” This vague language seems fraught with potential disputes, although there are standards under other laws for what “unduly disrupt” means—including the Family and Medical Leave Act.

Private sector employees would be limited to accruing a maximum of 160 hours of comp time per year, and employers would be required to pay out any unused comp time at the end of the year. Public sector employers are subject to different caps and payout requirements.

Any time a private employer chose to do so, it could cash-out employees’ comp time banks when they exceeded 80 hours, or discontinue their comp-time policy altogether, with 30 days’ notice. What’s good for the goose is good for the gander, so the legislation also provides that a private sector employee can terminate participation in comp time, and go back to getting overtime pay, as long as the employer gets 30 days’ notice.


The Bill’s Prognosis

Not surprisingly, a challenge looms in the Senate for H.R. 1180. As the House vote suggests, congressional Democrats and their allies fiercely oppose the measure, opining that it will undermine the 40-hour workweek standard and allow employers to defer payment of comp time for up to 13 months, amounting to an interest-free loan for employers. In his own press release, Rep. Mark Takano (D-Calif.), ranking member of the House Subcommittee on Workforce Protections, stated that the bill “gives employees no meaningful rights they don’t already have, and gives employers the flexibility and the power to withhold overtime pay in exchange for a false promise of comp time in the future.”

Supporters of the bill disagree. In Bloomberg’s reporting on the bill, Rep. Virginia Foxx (R-N.C.), chairwoman of the House Committee on Education on the Workforce, is quoted as saying, “This bill is about freedom, flexibility and fairness,” noting that it gives workers the freedom to choose what is best for themselves and their families. She also said, “For some workers, money in the bank may be the best choice for them, and nothing in the bill would take that away, but other workers would seize the opportunity for time off with their family.”

The legislation faces an uncertain fate. Unlike House proposals, Senate bills (except for tax and budget-related measures) can be filibustered (kept from an up-or-down vote) by opponents.  It takes 60 votes in the 100-member Senate to break a filibuster. Republicans hold only 52 Senate seats, with Democrats in 46, and Independents in the remaining two. 

But, if the bill passes the Senate, President Trump is likely to sign it. After House passage of the bill, the White House issued a statement indicating that President Trump’s advisers would recommend that he sign the bill into law if presented in its current form.

Stay tuned to Wage and Hour Watch for further developments.    

The material in this blog is not intended, nor should it be construed or relied upon, as legal advice. Please consult with an attorney if specific legal information is needed.

- Mike Staebell


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