On May 3, Congress passed a bill that could change the way employers compensate their employees for overtime and there is a lot of commentary taking place on both sides of the aisle. While The Working Family Flexibility Act still has a long way before it becomes law, we know that there are still a lot of questions floating around. This article seeks to address a few of the more common concerns you may have.
Could Comp Time Replace Overtime Pay?
Maybe. That is to say that, indeed, the Working Families Flexibility Act of 2017 does amend the Fair Labor Standards Act of 1938 to provide compensatory time for employees in the private sector. But that doesn’t mean overtime pay will go away completely – if at all (depending on whether or not a particular employer actually decides to participate in the program).
According to the bill, employers would have the choice of whether or not they would like to provide their employees with compensatory time option. If they decide to go this route, the comp time would be given “at a rate not less than one and one-half hours for each hour of employment for which overtime compensation is required” instead of monetary compensation for time worked in excess of 40-hours-per-week.
Not only do employers get to decide if participation makes sense in their business, the final decision concerning the employee’s compensation method actually lies with the employee. It’s ultimately the worker who gets to say whether they want the paid time off option or if they would prefer a larger paycheck.
So, could compensatory time replace overtime pay? It depends on a variety of factors and preferences. Employers can decide whether they want to give their employees the option of choosing comp time in lieu of monetary compensation, but the onus rests with the employee when it comes time to determine the actual payment method.
Read Also: The Pros And Cons To Incentive Compensation Plans
Does This Legislation Hurt Workers?
It depends who you ask. Proponents of the bill say it will give employees a chance to spend more time outside of the office or job site, which can be viewed as an excellent benefit among those who, for example, want to spend more time at home raising a family or attending their children’s school functions. Those in opposition, on the other hand, say that employees may feel pressured to take the paid time off option over the monetary option.
Mike Aitken, vice president for government affairs with the Society for Human Resources Management (SHRM) says the Working Families Flexibility Act would give employees “the opportunity to build a bank of time that they can use to take paid time off when they need it, provided the time off does not unduly disrupt the business operations of the employer.”
The bill states that employees will also have the option to “save as much as 160 hours – or about one month’s worth – of paid time off.” Then, at year-end, time not used by the employee would be reimbursed by the employer.
Debra Ness, president of the National Partnership for Women & Families, argues that the bill actually offers less flexibility, less pay and less time.
“Congress should instead prioritize higher wages and truly family-friendly measures, such as paid sick days, paid family and medical leave, fair pay and schedules, and protections for pregnant workers,” Ness said.
Does This Legislation Hurt Employers?
SHRM, proponents of the bill, states “many U.S. employers have sought the right to offer workers a choice of paid time off equivalent to time-and-a-half pay for overtime hours worked, and many private sector workers favor having that choice. This bill may be the solution they’ve been looking for.”
That said, employers are reminded that participation is voluntary. Those who do participate, according to some lawmakers, would likely save money by offering paid time off instead.
Next Steps
It’s important to remember that the Working Families Flexibility Act is still in the early stages of the legislative process. In order to become the law of the land, it must pass through the Senate and receive President Trump’s signature before it becomes law. How far the measure will go, however, remains unclear.
According to United Press International, similar bills passed through the House in 1996,1997 and 2013, but fizzled out when they entered the Senate. “With current GOP control of the White House and both houses of Congress, the bill has its greatest chance of becoming law, although it will require the support of at least eight Senate Democrats to avoid a filibuster.”
If you’re wondering how the Working Families Flexibility Act of 2017 would impact your business’s bottom line if it were to become law or you have other employee compensation concerns, let us know. We would like to address your questions and challenges in a future article or podcast.
By Matt Long (Wooster office)