House passes comp time bill

May 08, 2017

Employment Law Alert

Author(s): Stephen J. Jones, Todd R. Shinaman

On Tuesday, May 2, 2017, the U.S. House of Representatives passed a bill that would allow employers to offer compensable, or “comp” time, in lieu of overtime compensation, to hourly employees under the Fair Labor Standards Act (FLSA). Such programs would give employees the option to accrue paid time off for overtime hours worked instead of receiving time-and-a-half pay as required under federal law. A similar system is already in place for many public-sector employees but is prohibited by current law in the private sector. According to the bill’s supporters, it will add flexibility to hourly employees’ schedules, allowing them access to more paid time off.

Overview of the bill

The bill, named the Working Families Flexibility Act, allows an employee and employer to enter into a written agreement to receive comp time (or, for unionized employees, via a collective bargaining agreement). The decision to offer the program is entirely voluntary for the employer, as is the employee’s decision to enter into such an agreement. In addition, employers may discontinue the policy as long as it provides thirty days’ notice. Similarly, employees are free at any time to withdraw from the agreement, or request in writing that any unused accrued comp time be paid out. An employer must pay the employee any accrued comp time within thirty days of the employee’s written request.

For employees who decide to enter into a comp time agreement, the bill permits those employees to earn up to 160 hours per year of comp time at a rate of 1.5 hours for every hour worked in excess of forty hours per week. If an employee wishes to use some of his or her accrued comp time, the bill states that an employer should allow the employee to use the time “within a reasonable period after making the request” but provides no specific timeline as to when an employer must allow the employee to use his or her comp time. Additionally, an employer may delay the employee’s use of comp time if it would “unduly disrupt the operations of the employer.” These provisions certainly leave room for dispute. Any unused comp time an employee has at the end of the year must be paid out by the employer.

The bill also provides protections against employer coercion. Specifically, employers cannot directly or indirectly intimidate, threaten or coerce an employee to enter into a comp time agreement or force an employee to use his or her accrued comp time. Any employer who violates this provision would face the stiff penalty of having to pay the affected employee double the amount of wages owed.

This is not the first time Republicans have proposed a comp time bill, and their efforts to pass such a bill to date have been unsuccessful. However, given that Republicans control both Houses of Congress and the White House, the chances of the bill passing are significantly higher than in recent years. Nevertheless, the bill will likely still face an uphill battle in the Senate. While the bill passed the House 229–197, it did so with no Democratic support and six Republicans voting against it. Republicans, who hold fifty-two Senate seats, would need the additional support of eight Democrats to overcome a filibuster (assuming all Republicans support the measure).

Given the lack of Democratic support the bill received in the House, it is unclear whether Senate Republicans will be able to secure the necessary Democratic votes to avoid a filibuster. If the Republicans cannot secure the necessary votes, and Democrats do decide to filibuster the bill, it will likely stall in the Senate.

State law

The FLSA does not preempt stricter state wage and hour laws, so unless a state expressly incorporates federal law, any state prohibitions on comp time will continue in effect. In New York, for example, the Labor Law expressly incorporates the exemptions set forth in Section 7 of the FLSA, the section the Working Families Flexibility Act amends, so comp time would be allowed if the federal legislation is enacted.

The foregoing has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel. If you have any questions or require any further information regarding these or other related matters, please contact your regular Nixon Peabody LLP representative. This material may be considered advertising under certain rules of professional conduct.

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