IS COMP TIME FOR PRIVATE SECTOR EMPLOYEES ON THE HORIZON?

Ask any employment law attorney about the availability of compensatory time (or “comp time”) in the private sector, and the answer will almost certainly be: “Comp time does not exist in the private sector.”  A bill pending in Congress, the Working Families Flexibility Act (HR 1406), could change that response.

THE ISSUE

The term “comp time,” as used in this context, refers to a practice under which an employee may work overtime during one work (i.e., more than 40 hours), and for each hour of overtime worked earn the ability to take 1.5 hours off in a subsequent workweek.   While many employers believe that there is a general ability to engage in this pay practice, that right is really quite limited.  In fact, it is currently only available to public sector employees.  Most public sector employees may accrue up to 240 hours of comp time if their employers permit comp time accrual.  Public safety employees, however, may accrue up to 480 hours.  As for the private sector, the framework is only available as to non-exempt employees who normally work fewer than 40 hours per week, and then only up to 40 hours, or to exempt employees since they are not subject to the overtime pay rules.  Public sector employees who earn comp time may use it in a manner that does not unduly disrupt their employer’s operations.

THE LEGISLATIVE HISTORY

Over the years, at least since 1995, bills have been introduced in Congress to allow comp time to be earned by employees in the private sector.  One of those bills passed the House in 1996, but otherwise the bills have stalled in committee or never came to votes by either house of Congress.  Except for the 1996 bill which passed the House a 225 to 195 vote, the bills have been largely promoted by Republicans and opposed by Democrats.

The Working Families Flexibility Act of 2013 is similar to its predecessors in many respects, including its partisan support and opposition.  This bill, though, which was only introduced on April 9th, appears en route to being voted upon by the full House.  Hearings were quickly held on April 11th, and through a procedural maneuver, the Committee voted to report it out of Committee on April 17th by a 23-14 party-line vote.  The number of co-sponsors has since reached 166, on partisan lines, and therefore it is quite possible that it will pass the full House this year, on partisan lines.

THE BILL’S CONCEPT OF COMP TIME

HR 1406 seeks to amend the Fair Labor Standards Act to authorize private employers to provide compensatory time off to private employees at a rate of 1.5 hours per hour of employment for which overtime compensation is required in accordance with an applicable collective bargaining agreement or, in the absence of such an agreement, an agreement between the employer and employee.  Among the other basic terms are:

  • Employees could accrue up to 160 hours of compensatory time;
  • By each January 31, the employer would have to cash out any unused compensatory time off accrued during the preceding year; 
  • Comp time may only be earned by employees who have worked at least 1,000 hours during a period of continuous employment with the employer in the 12-month period before the date of agreement or receipt of compensatory time off;
  • Employers may not intimidate, threaten or coerce employees in order to (1) interfere with an employee’s right to request or not to request compensatory time off in lieu of payment of monetary overtime compensation, or (2) require an employee to use such compensatory time;
  • Employers could still choose whether or not to offer compensatory time as an option under the bill, and they can discontinue plans and cash-out hours accrued over 80 by giving employees a 30 day notice;
  • Employees may also request to be cashed-out by giving a 30 day notice; and 
  • Employees who are cashed-out, whether at the year-end, upon separation for any reason, or a plan’s discontinuance, must be paid at the higher of the rate the employee was earning at the time the comp time was earned or earning at the time of the payment.

THE DEBATE

To many, the concept of “Flexible Families” is centered on a view that the FLSA needs updating and that private sector employees should have rights to earn comp time in lieu of overtime pay similar to those of their public sector counterparts.  Put another way, in this day and age, some employees are more interested in earning extra time off to spend with their families than earning extra overtime pay.   The opposing side insists that the concept is a device to allow employers to work employees extra hours to save money, and to thereby unduly burden employees.

THE REALITY

Given the many protections in the bill, though, the belief that employers wish to have comp time available to exploit employees appears misplaced.  Employees can only earn comp time if they volunteer to partake in the comp time plan.  Employees also can opt out of the plan at their will, and be paid for the value of their accruals.  Therefore, it appears that the bill truly provides employees with significant control over the comp time program and would only choose to partake if they truly would prefer to have the extra time off, with pay.

Partisanship is the rule of the political process at this time, and therefore the likelihood of the Senate passing the bill is slight.  Other bills have been introduced as a Democratic alternative, such as bills allowing paid leave time for employees to attend their children’s school activities and take children to doctor appointments.  Bills to raise the minimum wage are also in play.  If comp time becomes law, it will likely be because some compromise on these issues is struck.  Compromise is, however, a four-letter word in “DC-speak.”

Whatever happens, the debate will serve to educate the general workplace of the commonly misheld rule, i.e., comp time is not currently available to private sector employees.  As the general workforce learns of this reality, employees may ask about comp time plans currently in place and whether they are due some extra pay.  Thus, as employees become more educated, employers may become more exposed to liability for providing employees with comp time in violation of the FLSA.  This potential liability is real, though ironic, in that many employees who are currently earning comp time are pleased with that arrangement and would not have otherwise worked the overtime.  Unfortunately, employees cannot waive their rights to overtime pay under the law.  Consequently, any private employers who are currently providing any of their employers with comp time should seek legal counsel without delay.

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