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Comp Time: Coming Soon to a Workplace Near You?

5/12/17

By: Paul H. Derrick

For the first time in many decades, private sector employers are a step closer to being able to provide compensatory time off (“comp time”) to their employees instead of paying monetary wages for overtime. Under current law, only government workers in the public sector can substitute comp time for overtime pay.

The Working Families Flexibility Act of 2017 has now passed the House, although no Democrats voted in favor of it. The bill next moves to the Senate, where some Democrats have threatened a filibuster.  Supporters point to the flexibility that comp time provides, particularly for working families. Most of the opposition to the measure appears to focus on the claim that allowing overtime work to be compensated with time off, rather than dollars, will unfairly reduce employees’ wages.

Here are some key points of the bill, as it now stands:

  1. If the worker and employer both voluntarily agree, in writing, or if it is contained in a collective bargaining agreement, the employer can provide comp time at the rate of one and a half hours for every hour of overtime that the employee works. The agreement must be entered into before the overtime work is performed.
  2. Employers may not try to coerce workers into choosing comp time and may not retaliate against workers based on their decision to elect comp time. A comp time arrangement must be entered into “knowingly and voluntarily” by the employee and cannot be imposed as a take-it-or-leave-it “condition of employment.”
  3. Employees are not eligible for comp time until they have worked at least 1,000 hours of continuous employment in the preceding 12 months.
  4. When an employee asks to use accrued comp time, the employer must grant the request “within a reasonable period,” unless doing so would “unduly disrupt the operations of the employer.”
  5. Comp time is limited to a maximum of 160 hours each year for each employee who elects it. All overtime hours in excess of that amount must be paid as monetary wages at regular overtime rates. Also, any comp time not taken by the end of the year would be paid out by the employer at the higher of the employee’s regular rate when the comp time was accrued or the employee’s current regular rate. The payout would have to be made no later than 31 days after the end of the “comp time year.” If employment terminates voluntarily or involuntarily, the employer is required to pay out all accrued comp time to the employee.
  6. The worker can always choose to take overtime pay instead of comp time by giving the employer 30 days’ written notice that the comp time arrangement is being revoked. Likewise, the employer can discontinue the comp time arrangement by providing 30 days’ written notice to the worker, and it can go ahead and pay out any accrued comp time in excess of 80 hours at any time after giving 30 days’ written notice.
  7. Employers who violate the comp time provisions of the law would be liable for up to the amount of accrued comp time plus an equal amount as liquidated damages.

We will continue to keep you apprised of developments in this area as they occur. In the meantime, if you have any questions or would like more information, please contact Paul Derrick at [email protected].