Comp. Time in Lieu of Overtime?
As a general reminder, private employers are not allowed to offer their employees compensatory time (“comp time”) off as a form of overtime compensation. Private employers are required, under Federal law (“Fair Labor Standards Act”) and State Law (“Illinois minimum Wage Law”) to pay employees at a rate of time and a half their regular rate of pay for all time worked in excess of 40 hours in a single workweek. That could all change now that the U.S. House of Representatives has passed a bill that would allow employees the option to take compensatory time off instead of being paid overtime.
Known as the Working Families Flexibility Act (“WFFA”), the legislation would provide:
- The employer and the employee must agree in advance and in writing that the Employee will receive an hour and a half off for every hour over 40 that the employee works in a single workweek;
- An employee can accrue up to 160 hours of comp time and the employee must be able to use the comp time within a reasonable amount of time after requesting the time off, so long as it doesn’t unreasonably disrupt the employer’s business operation;
- The employer must pay the employee for any unused comp time at the end of the year and upon termination of employment;
- An employer can not incentivize or intimidate an employee into selecting comp time over overtime payments, and the employee can revoke the agreement and receive payment at any time.
Legislation such as this has been introduced in the past, but with little success. Now the legislative landscape is different with Republicans holding both houses of Congress and a staunchly pro-business approach taken by the new administration. It should be noted that the Senate has also proposed a similar bill, but it is still in committee discussions. If it comes out and is approved by the senate, there will be an attempt to arrive at a compromise bill which is likely to be enacted into law.
There are some practical concerns with offering comp time instead of overtime pay. First off, it will create extra administrative burdens for employers to keep track of which employees have agreed to receive comp time and which employees still want to be paid cold hard cash. Record keeping as to those who elect to receive comp time could be an issue as an employer will have to meticulously track the number of hours or days of comp time available. It could also lead to work shortages if numerous employees accumulate comp time and decide to use it in the same time frame. Finally, it could expose employers to claims of retaliation, with one possibility being that employees allege the employer gave overtime shifts to employees that selected comp time and therefore incentivized employees to elect comp time over overtime.
The rules governing overtime are clearly in flux right now. In December of 2016, new regulations were supposed to go into effect which would have dramatically raised the salary thresholds, making millions of workers eligible to receive overtime pay. However, those regulations have been put on nationwide hold by a court in Texas which is examining the legality of those new wage thresholds. The new administration has not moved with lightning speed to challenge the court holding, and may in fact try and scale back or simply refuse to enact the proposed salary thresholds.
If the House and the Senate can arrive at a compromise bill, there may be a change to the overtime laws which would allow for compensatory time off in lieu of overtime pay. As your legislative watchdog, we will keep an eye out for developments in this area and update you as soon as anything happens.
With over 30 years’ experience in advising employers and employees on workplace issues, let Boznos Law work with you to ensure you are ready to meet the challenges posed by the changes to the employment laws. Call Bill Boznos today at (630) 375-1958 or contact us at www.boznoslawoffice.com/contact-us through our website.