On May 8, the House of Representatives passed a bill that would allow private sector employers to offer hourly workers the option of taking compensatory (“comp”) time in lieu of paid overtime. The bill seeks to amend the Fair Labor Standards Act to allow private sector employers to offer comp time at a rate of 1.5 hours per hour of overtime worked instead of paying cash wages at time-and-a-half the employee’s regular rate for all hours worked over 40 in a workweek.
Under the bill, such a comp time arrangement would need to be agreed to in writing by both the employer and employee. Any unused comp time would be paid out at the end of each year, and employees would also be allowed, upon request, to “cash out” any accrued comp time.
Although there is currently no companion bill in the Senate, Republican backers have touted the bill as a commonsense approach for the 21st Century that provides workers with the flexibility needed to balance family and work obligations. Private sector employees would now have the same flexibility as public sector employees (who are legally allowed to be offered comp time) to take such comp time to care for a sick child or chaperone their child’s field trip. Conversely, Democrats claim the bill gives too much leeway to employers as to when the comp time can be taken and may lead employers to favor workers who choose a comp time arrangement in lieu of cash payment.
We will have to wait and see if this measure picks up steam in the Senate. In the meantime, it is important to remember that this bill is not law. So if you are a private sector employer, you cannot offer comp time to your employees in lieu of paying overtime. Private sector employers must pay their non-exempt employees 1.5 times their regular rate of pay for all overtime hours worked.