The Working Families Flexibility Act is a proposed amendment to the Fair Labor Standards Act (FLSA). If passed, it would allow employees to choose between receiving monetary compensation for overtime hours worked, or to receive compensatory time off.
Proponents of the legislation argue that the Act would benefit employees who have family obligations, particularly women, who could choose to prioritize self-care and family obligations without losing wages.
Critics express concern that the Act would give too much power to employers, who could unilaterally decide to scrap the plan, not grant an employee’s request to use compensatory time, or manipulate overtime hours by giving preferential treatment to employees who elected to receive compensatory time off.
The Working Families Flexibility Act was introduced by two Republicans: Representative Martha Roby (Ala.) and Senator Mike Lee (Utah). It passed the House with a vote of 229-197, largely along party lines (229 Republicans voted in favor of the Act, while 191 Democrats and 6 Republicans voted against).
If passed, the Act would apply only to employees who are currently covered by the FLSA. It would not apply to employees of a public agency.
The Act proposes that an employee could choose to receive compensatory time off in lieu of overtime pay at a rate not to exceed one and one-half hours for each hour of overtime worked. An employee would not be permitted to accrue more than 160 hours of compensatory time off per year.
To be eligible to receive compensatory time off in lieu of overtime compensation:
An employee would be able to choose to participate in the compensatory time off program. If an employee chose to participate in the program but later wished to no longer participate, the employee could request, in writing, to withdraw from the agreement to accrue compensatory time off, and request that any unused compensatory time off be paid at the employee’s regular hourly rate. Upon receiving such a request, the employer would pay the employee for any unused compensatory time off within 30 days of receiving the request.
In situations when an employee would be paid for compensatory time off, the employee would be paid at either the employee’s regular rate of pay at the time the compensatory time off was earned, or the employee’s regular rate of pay when the compensatory time was paid, whichever is higher. An employer would be required to pay an employee for any unused compensatory time no later than January 31, or within 31 days after the end of a 12-month calendar period set by the employer. An employer may also elect to pay out compensatory time for any hours accumulated over 80, as long as the employer gives the employee a minimum of 30 days notice.
If an employee were to be voluntarily or involuntarily terminated, the employee would be paid for any unused compensatory time off.
An employer could unilaterally decide to discontinue allowing employees to accrue compensatory time off, as long as the employer provides 30 days notice to affected employees.
The employer would have the right to approve or disapprove of an employee’s use of compensatory time off. However, the Act provides that the employee must be permitted to use the time within a “reasonable period” after requesting the time off. The employer could deny the request for time off if it “unduly disrupt[s] the operations of the employer.”
If an employer threatens or coerces an employee to participate in the accrual of compensatory time off or to use the time off, the employer would be liable for the monetary amount of the compensatory time, plus liquidated damages equal to the value of the accrued compensatory time off.
Critics of the proposed Act are concerned that it gives too much discretion to the employer to deny an employee’s request to use compensatory time off. Employers might be tempted to abuse the compensatory time off program by assigning more overtime hours to employees who opt to accrue compensatory time off rather than to receive overtime wages. This could be used to leverage employees to choose to accrue compensatory time off instead of monetary payment. An employer could also manipulate the timing of an employee’s receipt of overtime pay, allowing the employer to delay paying overtime, especially if the employer intends to discontinue the policy.
An employee would have no guaranteed right to use the accumulated time off when they need it, even in cases of a personal or family emergency. This could create a situation where, for example, a low-wage, working single-mother could be forced to work 50 hours during Spring Break when her children are off from school, and in exchange for that overtime work get 10 hours off another week when they are back in school. While this would create flexibility for the employer, it would cost the employee extra money for child care, lost money in overtime earnings, and less time with her family. There would be no remedy for an employee whose request to use compensatory time off was denied, other than to request a cash payout for unused accrued time off, which might not be paid for up to 30 days after the request was made.
Employers could also unilaterally decide to pay employees for any banked compensatory time off beyond 80 hours, which would jeopardize an employee’s careful planning for time off for parental leave or a major health event like surgery.
If an employer goes out of business or declares bankruptcy, the employee would have no recourse to recover the value of the banked time.
The Working Families Flexibility Act has not yet been passed into law, but of all the legislation that could impact an employee's paid time off that is under consideration this legislative session, it has received the most attention.
If you have questions about how the Working Families Flexibility Act might affect you, or if you have other employment law questions, contact the experienced employment discrimination attorneys at Brady & Associates today.