SHRM to Congress: Make Comp Time Available to Businesses

Two SHRM members ask for legislation to allow employers to offer time off in lieu of overtime pay

Allen Smith, J.D. By Allen Smith, J.D. April 6, 2017

​Compensatory time off—comp time—should be available to employees in the private sector, not just workers in the public sector, according to Leslie Christ, SHRM-CP, chief resource officer for WellStone Behavioral Health in Huntsville, Ala. Christ and Crystal Frey, vice president of human resources at Continental Realty Corp. (CRC) in Baltimore, spoke on behalf of the Society for Human Resource Management before Congress on April 5, urging representatives to enact the Working Families Flexibility Act, H.R. 1180. The bill would amend the Fair Labor Standards Act to allow comp time at companies and small businesses. The Department of Labor describes comp time as "paid time off the job that is earned and accrued by an employee instead of immediate cash payment for working overtime hours."

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

H.R. 1180 would permit private-sector businesses to offer employees the choice of being compensated for working overtime in the form of cash payments or time off from work. Currently, noted House Education and the Workforce Committee Chairwoman Virginia Foxx, R-N.C., the public sector has the right to comp time but the private sector does not. This "just doesn't make any sense."

Benefits to Workers of Comp Time

Testifying before the House of Representatives Education and the Workforce Committee, Christ said, "I believe many of my employees would benefit from having the choice of comp time, especially since 63 percent of our employees are nonexempt."

She gave three examples of when comp time could have been helpful to WellStone employees:

  • A clerical staff member who was pregnant was not yet eligible for paid leave under the company's short-term disability plan. "While working on a major project, she incurred significant overtime and asked if we could waive the overtime to credit her that time so she could take that time off and receive pay during her maternity leave," Christ said. "It was difficult telling this single mom-to-be that this arrangement was not an option under current law."
  • Christ's 18-year-old son, who works at WellStone, would like a leave "savings plan," where he could build a bank of paid leave and, if he didn't use it, get a lump sum payout at the end of the year.
  • WellStone employees, who provide services to patients with mental illnesses, 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."

Bill's Provisions

Under H.R. 1180, paid time off would accrue at a rate of one and a half hours for each hour of overtime worked. Employees could accrue up to 160 hours of comp time per year. An employer could choose to cash out the comp time after 80 hours if it provided the employee with 30 days' written notice. No later than Jan. 31 of each year, the employer would have to provide monetary compensation for any unused compensatory time off accrued during the preceding calendar year that was not used prior to Dec. 31 of the preceding year. An employee would be able to request in writing that monetary compensation be provided at any time for all accrued compensatory time.

"Offering workplace flexibility is key to recruiting and retaining top talent," Frey said. "This is especially true for my company, which competes for talent in the Washington, D.C., metro area, where many federal workers can use comp time."

She added, "Many CRC employees have inquired about comp time. I can tell you it is incredibly difficult to explain to employees why they cannot choose for themselves whether to take overtime pay or paid time off for any hours worked over 40 in a week."

Criticisms of Legislation

Victoria Shabo, vice president at the National Partnership for Women & Families, a nonprofit advocacy organization in Washington, D.C., criticized the bill. She testified, "This flexibility bill offers forced choices and false promises."

More specifically, she said that the bill:

  • Allows businesses, which have superior power under the terms of the bill, to coerce workers into accepting comp time to please employers, despite provisions in the bill that would allow workers to sue if they were pressured into choosing comp time. Although there must be a voluntary agreement between employers and employees over comp time, employers may offer comp time in lieu of overtime to one, some or all eligible workers.
  • Permits employers to defer compensation to employees for as long as 13 months. "In essence, comp time creates an interest-free loan for employers because employees who work overtime today may not see the value of that overtime for more than a year," she said.
  • Gives employers the flexibility to decide when and if comp time can be used. "The plain language of the bill requires an employee to make a request in advance to use the comp time he or she has earned, gives the employer a reasonable period after the request is made to say yes or no, and permits the employer to deny the request entirely if the employee's use of comp time would unduly disrupt operations," she said. "This means that a mother who asks to take comp time to stay home with her toddler because her child care provider is sick would have no guarantee that she'll be able to use the time she's earned and banked."

This argument resonated with Rep. Carol Shea-Porter, D-N.H., who asked each of the witnesses whether there would be an ironclad guarantee under the bill that the employee could use the comp time.

Bill Defended

An employee would be guaranteed up to 80 hours of comp time, said Leonard Court, an attorney with Crowe & Dunlevy in Oklahoma City. Speaking on behalf of the U.S. Chamber of Commerce, he noted that the value of comp time actually may be greater than overtime since, by the time a payout of accrued pay leave is due, someone may have been given a pay raise.

He emphasized, "The decision to opt for comp time always rests with the employee, not the employer. The bill explicitly prohibits employers from trying to intimidate, threaten or coerce any employee regarding their rights to choose or not to choose to take the comp time option or their right to use banked comp time."

He added, "Given that an employee can request a payout of their accrued earnings at any time and the employer must comply within 30 days, employers will need to ensure that sufficient funds are obligated to cover these amounts."

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