Bill Advances to Allow Choice of Paid Time Off for Overtime Hours

Measure would empower workers with greater flexibility, advocates say

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The U.S. House of Representatives will soon vote on legislation to let private-sector employers offer workers, if they aren't exempt from mandatory overtime pay, the choice to receive paid time off in lieu of cash wages for overtime hours worked. The Society for Human Resource Management (SHRM) is supporting the measure.

The House Committee on Education and the Workforce approved H.R. 1180, the Working Families Flexibility Act of 2017, on April 26 by a party-line vote of 22 to 16, sending the bill to the full House for an upcoming vote, not yet scheduled.

Many U.S. employers have long advocated for 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, which they are now denied by the Fair Labor Standards Act (FLSA). The bill would amend the FLSA to allow employers to provide employees with a time-off-for-overtime option, which government employees currently receive.

Enhancing Workplace Flexibility

"Unfortunately, rigid, out-of-date wage and hour laws currently prohibit private-sector employers from offering nonexempt employees the option of paid time off or cash wages for overtime hours worked, even though this option has existed in the public sector for more than 30 years. H.R. 1180 would simply extend to the private sector a benefit that has long been enjoyed by government employees," said Mike Aitken, SHRM's vice president for government affairs, in an April 20 letter to the bill's chief sponsor, Rep. Martha Roby, R-Ala., copied to all members of Congress.

"Providing this comp time option would allow 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," Aitken noted. "Employees who reconsider and decide that they prefer to receive their overtime compensation in cash can have their hours converted to a payment whenever they wish, and any banked comp time hours not used at the end of the year are automatically paid out to the employee in cash."

"Outdated federal rules that demand rigid work schedules are making it more difficult for workers to find the flexibility they need," Education and the Workforce Committee Chairwoman Virginia Fox, R-N.C., said following the committee's vote. "By providing private-sector employees the choice of paid time off for overtime hours worked, we can empower more hardworking Americans to do what's best for themselves and their families."

[SHRM members-only HR Q&A: Is compensatory time allowed in the private sector?]

Worker Protections

The bill includes strong protections to ensure employees have a real choice in the matter "even stronger than those that currently exist in the public sector," Foxx said, in response to opponents of the measure, who claim employers would pressure workers to take time off in place of receiving overtime pay.

For instance, among its provisions the bill would:

  • Allow employers to offer employees a choice between cash wages and accruing comp time for overtime hours worked. No employee could be forced to take comp time.

  • Protect employees by requiring the employer and the employee to complete a written agreement to use comp time, entered into knowingly and voluntarily by the employee.

  • Retain all existing employee protections in current law, including the 40-hour workweek and overtime compensation accrual requirements.

  • Allow employees to accrue up to 160 hours of comp time each year. An employer would be required to pay cash wages for any unused time at the end of the year. Workers would be free to "cash out" their accrued comp time whenever they choose to do so.

  • Prohibit employers from intimidating, coercing or forcing employees to accept comp time instead of cash wages. Those in violation of the law would entitle employees to double the amount of wages owed.

  • Require the nonpartisan Government Accountability Office to report to Congress on the extent private-sector employers and employees are using comp time, as well as the number of complaints filed with and enforcement actions taken by the U.S. Department of Labor.

During an April 5 hearing before Foxx's committee, private-sector HR executives spoke on behalf of SHRM, urging representatives to enact the bill.

Leslie Christ, SHRM-CP, chief resource officer for WellStone Behavioral Health in Huntsville, Ala., explained that her firm provides services to patients with mental illnesses, and employees work alongside Huntsville police officers who have the option of receiving overtime pay or comp time.

"It is not uncommon for the officers to discuss their comp time arrangement with my employees, who then come to me on a regular basis asking why we do not offer comp time as an option for staff members," she said. "These employees believe it is WellStone denying them this option, until I explain that it is federal law, the Fair Labor Standards Act be exact, that prohibits comp time for the private sector, yet allows it for the public sector." 

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