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Congress Finally Revisits the FLSA – Is Comp Time Coming?

A common misconception among many employers is that they can give “comp time” to nonexempt employees in lieu of paying overtime. While the Fair Labor Standards Act (“FLSA”) does allow public employers to offer compensatory time to nonexempt employees under certain circumstances, until now, any private employer who did so would still be liable for unpaid overtime. The Working Families Flexibility Act (the “WFFA”), which was passed by the House of Representatives last week, may change this.

If approved by the Senate, the WFFA would represent a significant change to the FLSA, the 1938 wage law that is often tough to reconcile with a changed, modern economy. The new law would allow certain non-exempt employees of private employers to choose paid time off instead of cash when they work more than 40 hours in a week.

If the WFFA becomes law, employers that wish to offer comp time would have to carefully implement new practices and be able to prove compliance with what is likely to be a new, and potentially complicated, recordkeeping regime. As now proposed, the law would allow employees to accrue up to 160 hours of comp time in lieu of overtime pay, but still be able to change their minds and cash in unused “comp time” if they choose. This possibility, combined with the requirement that employers pay employees for comp time that goes unused at the end of a year, emphasizes the importance of accurately tracking employees’ comp time accruals and being able to pay it out when necessary. In addition, employers would have to establish that employees’ elections of comp time in lieu of paid overtime were voluntary, and companies will need to create and maintain written agreements to that effect. Finally, employers wishing to offer comp time will need to monitor just which members of the workforce are eligible: under the law now proposed, employees would have to work at least 1,000 hours in a 12-month period to be eligible for comp time. In short, while the new law would create more flexibility, it will also introduce new recordkeeping requirements for which employers need to be ready.

It will be interesting to watch what happens to the WFFA in the Senate, and what changes are made before that chamber votes. We will need to stay tuned to determine whether comp time in lieu of overtime pay will become an option for private employers. But one thing is now clear: Congress is casting a critical eye toward the FLSA, and additional changes to reflect modern schedules, industry practices, and employer and employee pay preferences may be coming.

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.