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Compensatory Time Comes to the Private Sector?

By Mark W. Weisman

On May 2, 2017, the U.S. House of Representatives passed the Working Families Flexibility Act (the “Act”), which would extend the option of accruing compensatory time to private sector employees. Presently, and for many years under the Fair Labor Standards Act (“FLSA”), only public sector employees were entitled to receive compensatory time in lieu of overtime for hours worked in excess of 40 in a work week. 

That is, public sector employees can elect to receive compensatory time off at a rate of not less than one and one-half hours for each overtime hour worked, instead of cash overtime pay. Law enforcement and fire department employees can accrue up to 480 hours, and other government employees can accrue up to 240 hours of compensatory time. Public sector employees are entitled to use compensatory time on the date requested unless doing so would “unduly disrupt” the public entity’s operations, and upon termination, all accrued compensatory time must be paid to an employee.

The Working Families Flexibility Act, proposed as an amendment to the FLSA, would entitle private sector employees to accrue up to 160 hours of compensatory time in a year at a rate equal to one and one-half hours of compensatory time for each overtime hour worked. The 40 hour work week remains, and only after working 40 hours in a given workweek would compensatory time become available in lieu of overtime pay. The Act would apply to employees who worked at least 1,000 hours in a period of continuous employment with the employer during the preceding 12-month period. 

The Act would also require a mutual, written agreement between an employee and their employer evidencing the employee’s acceptance of compensatory time in lieu of overtime pay for hours worked over 40 in a work week. Critically, that agreement may not be made a condition of employment. If the employee is represented by a union, the provision for use of compensatory time must be made part of a written collective bargaining agreement. Further, whether to accrue compensatory time or to be paid overtime would, under the Act, be the employee’s choice, and employers are forbidden from requiring employees to use compensatory time.

Democratic members of the House opposed the Act on the grounds that it would weaken the overtime requirements of the FLSA and diminish take-home pay for working families. We will monitor the Act’s progress as it moves through the Senate.