More Paid Time Off? Sorry, You’re Exempt.

Soon, it just might pay to be overtime-eligible. The House Republicans (with no Democratic support) just passed a bill that would overhaul the Fair Labor Standards Act. Non-exempt employees who work over 40 hours in a workweek could choose to take time-and-a-half pay or extra paid time off, commonly called “comp time.” Today, only government employees can take comp time – not employees in the private sector.

The bill is aptly titled the “Working Families Flexibility Act” (H.B. 1180) and can be found here. (Folks without kids might call prefer to call it the “Sanity Day on the Beach Act.”)

So what is Congressional Democrats’ beef with the bill? Roughly speaking, they’re concerned that overtime pay will disappear as employers coerce employees to take time off instead of fattening their paychecks.

Fair concern, but is it valid? The bill offers employees some stiff protections:

  •  An employer must adopt a written policy to offer comp time at a rate of 1.5 comp time hours    for every 1 overtime hour;                                                                                                                            
  •  Each non-union employee must opt-in to the comp time policy by “knowingly and    voluntarily”   signing an agreement to use comp time;                                                                                                              
  •  No employee can opt-in to the comp time system before she has worked at least 1,000 hours  continuously employed by the company during the 12 months before she agrees to opt-in;                                                                                                                                                                       
  •  An employee’s comp time bank cannot accrue beyond 160 hours in a single employer-  designated year;                                                                                                                                                                           
  •  When an employee asks to use comp time, the employer must allow it “within a reasonable  time” after the employee asked unless the comp time would “unduly disrupt” the employer’s  operations;                                                                                                                                                       
  •  If an employee has not used the accrued comp time in her bank by the end of the year, the  employer must pay it out;                                                                                                                         
  •  An employee can ask to get paid for comp time (or ask to be paid for part of her accrued comp  time) at any time;                                                                                                                                                        
  •  When an employee leaves the employer for any reason, the employer must pay for accrued comp  time;                                                                                                                                                                             
  •  An employer can’t do anything to “intimidate, threaten or coerce” an employee’s free choice on  taking comp time or overtime pay.

Plaintiff’s counsel just might like the stiff protections. Think about all the fights that a single disgruntled ex-employee could cause that he didn’t “knowingly and voluntarily” opt to get comp time, or that the employer didn’t have a good enough reason to deny his request to use comp time, or that the employer somehow coerced him into taking comp time instead of getting paid overtime. All it takes is one guy or gal to launch an overtime class lawsuit.

So employers have some thinking to do about how to avoid those fights. That’s ok.

Comp time could help blunt the impact of the Department of Labor’s temporarily-stalled rule that lowers the salary threshold to be exempt from overtime pay. Employers have rightfully been concerned about the rule. We’ve written for Texas Lawyer about it here.

For today, non-exempt employees must still get paid for overtime work. We’ve written for the Corporate Counsel Review on how to deal with the tricky bits that lead to off-the-clock work class lawsuits. Some transactional HR steps and some knowledge about what time must be clocked can both pay off huge. You’ll find that article here.

Now the Working Families Flexibility Act faces the Senate. There, SRHM believes the Democrats may filibuster to block the bill. Check out the article here.

Let’s see what happens.