The U.S. House of Representatives has passed the Working Families Flexibility Act of 2017, which would allow private sector employers to offer eligible employees compensatory time off in lieu of compensation for overtime hours. The bill, passed last week by a vote of 229-197, would amend the Fair Labor Standards Act. If enacted, the bill could result in lower overtime costs for employers and more flexibility for employees. Notably, however, the current version of the bill does not preempt state laws. Thus, employers in states that prohibit the use of compensatory time off for private employers, such as Pennsylvania and New Jersey, would still not be able to provide compensatory time to their employees.

Under the House version of the bill, which still requires Senate approval, employees could elect to receive one-and one-half hours of compensatory time off instead of cash payments for each hour that overtime compensation would be required. Employers with unionized employees would be required to bargain over compensatory time. For non-union employees, an employer would have to obtain the employee’s voluntary, written agreement in advance of the performance of the overtime work. Employees must be permitted to use the compensatory time within a “reasonable period” after making a request to use the time, as long as it would “not unduly disrupt the operations of the employer.”

The bill prohibits employers from intimidating, threatening, or coercing employees to accept or not accept compensatory time off in lieu of overtime pay.

The bill allows employees to accrue a maximum of 160 hours of compensatory time in a year.  Any unused time must be paid to the employee at the conclusion of each year or upon termination of the employee’s employment. Alternatively, an employer could provide monetary compensation for unused compensatory time in excess of 80 hours at any time, provided that the employee has 30 days’ notice.

The Trump administration announced its support for the bill in its current form, stating that it would “help American workers balance the competing demands of family and work by giving them flexibility to earn paid time off—time that they can later use for any reason, including family commitments like attending school appointments and caring for a sick child.”

Ballard Spahr's Labor and Employment Group regularly assists clients with Fair Labor Standards Act compliance, audits, and litigation.

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