Compensatory time, or “comp time,” has long been a benefit available only to public sector employees. When comp time is available, an hourly employee who works overtime is awarded additional time off in lieu of monetary compensation. The award is made at the same “time and a half” rate that overtime is paid, and is added to the employee’s vacation or Paid Time Off “PTO” bank.
Specific rules such as whether or not comp time is mandatory or voluntary, and when it can be used, are dependent upon each employer’s policy. The Fair Labor Standards Act (FLSA) does not allow private employers to grant comp time to hourly employees working overtime, but instead must pay the employee “time and a half” for those overtime hours on the next paycheck.
On May 3, 2017, the U.S. House of Representatives passed a bill which would grant private employers the opportunity to offer compensatory time off to hourly employees in lieu of overtime pay. The Working Families Flexibility Act of 2017 would allow private employers to offer employees compensatory time in lieu of cash overtime pay.
Proponents of comp time argue that updating the Depression-era FLSA would allow today’s hourly workers more choice and flexibility in how they use their time. Advocates also argue that just about any working parent would say that time off can be more valuable than the corresponding overtime pay. Additional time off is a benefit that allows employees to “bank” overtime compensation for use at a later time.
The bill provides parameters and guidelines for comp time policies which require that the policy be agreed to by the employee in writing, cannot be a condition of employment, and must be in place prior to the overtime being worked. Further, the bill imposes limits on the number of hours of comp time that can be accrued and how long an employee can leave it in his or her PTO bank before it must be paid out by the employer. Employers must allow their employees to use their time off within a “reasonable period” after making a request, but can deny the request if it would unduly disrupt operations.
The bill’s opponents say that comp time simply amounts to an interest-free loan to employers, and express concern that there is no guarantee that workers can take the time off when they want. Concerns also have been voiced that employers will grant overtime first to those who agree to accept comp time and deny extra hours and pay to those who may need it the most.
This isn’t the first time the House has passed a bill to make comp time available to private sector employers; similar measures have passed the House in 1996, 1997 and 2013, and each stalled in the Senate. The Working Families Flexibility Act of 2017 faces an uncertain future with the Senate as well.
While having a voluntary comp time policy can be one more tool in a company’s arsenal of benefits to attract the best possible employees, employers will need to ensure the policy is appropriate for their workforce, well thought out, communicated effectively, and compliant with the law in its final form.
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