Overtime law updates have been in the US news for over a year now, with a definite outcome yet to come. The once-proposed changes to the overtime salary threshold under the Obama administration quickly devolved into the stalling of its implementation, parties on either side trying to push for a favorable decision, and businesses of all sorts scrambling to undo the various measures they’d undertaken in anticipation of the seemingly now-defunct changes.
Today, the most recent proposed change to overtime pay is being similarly battled out, and — if passed by the Senate — may sound a death knell once and for all to the original overtime changes proposed under Obama.
First, a quick overview
This latest bill — the Working Families Flexibility Act — proposes to tweak the FLSA’s stipulation that employers must pay employees overtime (at 1.5 times the regular rate for time worked over 40 hours each week). If the bill passes, then employers would have the option to offer non-exempt employees compensatory time off (banked at the rate of 1.5 times the number of overtime hours worked, up to 160 hours) in lieu of overtime pay. Though the FLSA already permits public sector employees to be given compensatory time instead of cash for overtime, the new bill would include private sector workers as well.
The bill has already passed in the house, and is now being considered by the Senate. Additionally, President Trump has indicated that he would sign the bill if it makes it to his desk.
Supporters of the bill claim that:
- It gives employees more flexibility at work and enables those with families to better balance the demands of work and home life
- Employees can use their comp time whenever they want, as long as they give reasonable notice and don’t “unduly disrupt” operations with their leave
- The comp time is just an option — not a mandate — and employees don’t have to give up overtime pay unless they choose to do so
Opponents of the bill claim that:
- It’s really the employers, and not the employee, that gets to choose when earned comp time can be used, which means families might not get approval for time off when they need it most
- It’s counterproductive to force workers to spend more time away from their families (overtime hours) in exchange for the possibility to spend more time with their families in the future
- The 1993 Family and Medical Leave Act enables most full time workers to take unpaid time off for medical and family emergencies, so families would be better off earning overtime pay, and then taking unpaid leave later if a medical or family emergency should arise
Implications for employers and employees
Before you rush to accommodate the latest in potential overtime legislation, consider the following implications for employers and employees:
- While the rule itself seems pretty simple and straightforward, employers need to deeply consider the implied policy and process changes, and — more importantly — how it would affect the overall morale of their workforce
- Internal rules would need to be instituted around what kind of leave requests can be approved, and how operations will be isolated from employees having access to more time off than before
- State and local jurisdiction regulations also need to be kept in mind as there are quite a few states, counties, and cities that have their own specific laws around overtime hours and pay, and it’s unclear how they would react to the change
- Account for the additional administrative effort that will likely stem from managing processes around employee time and time off banks
- Employees who value flexibility over additional pay can choose to bank hours for extra time worked and use it when they need it (of course, with some restrictions and advance notice to their employers)
- Remember that supervisors still have the option to decide if an absence on a particular day would disrupt operations and either reject the request or specify an alternate day for taking leave
- Any unused comp time will get paid out annually or at the time of termination, which means there is less scope for losing out on benefits
Whether the bill will actually help improve work-life balance and flexibility is a conclusion for which we’ll have to wait and see. American workers are already notorious for not using their vacations and overworking, so employers may need to pay the comp time hours at the end of the year anyway.
On the whole, businesses often find it difficult to even meet existing labor laws, and this could well be an additional burden without proper processes and systems in place.