Working Families Flexibility Act: Pending Legislation That Could Change Overtime Options

Recently, the U.S. House of Representatives passed a bill, H.R. 1108, entitled “The Working Families Flexibility Act.” The bill is now in the Senate, awaiting action by the Committee on Health, Education, Labor, and Pensions. The legislation would amend the Fair Labor Standards Act to extend to private employers and eligible hourly employees the ability to substitute paid time off for overtime compensation, a choice that public-sector employees have had since 1985. The paid time off would be at the same rate as overtime, at least one and one-half hours for each hour worked.

While the proposed law sounds simple and has supporters who claim it is a way to help workers bank overtime hours to use for family responsibilities instead of receiving pay, many organizations and individuals have voiced opposition. The title has been characterized as a misnomer. The bill has been called a “wolf in sheep’s clothing” and a “smoke-and-mirrors” proposal. Opponents say that in reality, the law would result in a pay cut and would not guarantee any time off.

Current Provisions of the Bill

Similar bills have been introduced three times previously, passing the House each time before failing in the Senate. It remains to be seen if the bill has a chance of passing the Senate this time. It could be amended in the Senate, in which case, it would return to the House. In the form that it was approved by the House and sent to the Senate, the bill provides that an employer may provide compensatory time in lieu of overtime pay for certain hourly employees. Here is a summary of the main provisions:

Offering the Option: Employer’s Choice

Initially, the decision whether to offer time off instead of overtime pay would be the employer's. If employees belong to a union, the policy must be part of the collective bargaining agreement. For non-union employees, if the employer decides to offer time off, the employee would decide whether to accept the option. If the employee accepts, the employer and employee must sign a written agreement signifying that the employee wants to bank time off instead of receiving overtime pay.

Opponents of the legislation fear the employers will pressure employees to accept time off. The bill prohibits employers from coercing employees to accept time off and includes legal sanctions if they do. However, opponents argue that many employees who would be eligible to bank overtime will not have the resources to pursue legal remedies if they are forced to accept time off in lieu of pay.

If the law passes, some employers will offer the option, but some won’t. Providing the option requires planning, expenses, and logistics for an employer. Some will opt not to provide it for that reason.

Limitations

To be eligible, an employee must work at least 1,000 hours during a period of continuous employment with the employer during the previous one-year period.

An employee would not be able to bank more than 160 hours of overtime. The employer can decide to pay the employee for overtime in excess of 80 hours after giving the employee 30 days’ notice. In addition, accrued comp time would have to be used within the employer’s fiscal year. After the end of each fiscal year, the employer would pay the employee for unused comp time.

Even if an employer decides to offer the option, it can be terminated on 30 days’ notice to the employees, unless it is covered by a collective bargaining agreement.

Cashing Out

If an employee changes his or her mind after opting in, the employee can “cash out” and receive the pay instead. The employer would have to pay the compensation within 30 days.

If an employee terminates his or her employment, voluntarily or involuntarily, the employer would be required to pay for unused comp time. There is no protection if the employer goes bankrupt or out of business.

Using Comp Time

The employee would be able to used banked time off for any reason, but the employer retains the right to approve or disapprove of an employee using the time. If an employee makes a request to use comp time, the employer must grant the request to use the time “within a reasonable period,” except that an employer can deny a request if use of the comp time “unduly disrupts the operations” of the employer.

Opposition Objections

Groups and individuals who object claim that the proposed legislation is anti-family and would actually result in employees having less time, less flexibility, and less money. They fear that employers would use the change as an opportunity to avoid overtime compensation obligations by forcing employees to take time off instead of pay or by favoring employees who will accept time off instead of pay by using those employees for overtime work.

Another objection is that the provisions give employers too much opportunity to deny requests to use the time by requiring reasonable notice and letting an employer deny any request simply by finding that the time off would unduly disrupt operations. Opponents say that the bill needs stronger disincentives for employers to do the wrong thing.

Democrats have introduced a different bill, confusingly named the “The Flexibility for Working Families Act,” which takes a different approach to helping working families. At the present time, with both houses of Congress controlled by Republicans, the Democrats’ bill is unlikely to gain traction.

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