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