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Striking a Blow for Work/Life Balance?

The House's recent vote to pass the Working Families Flexibility Act has rekindled the political debate around comp time versus overtime for private-sector employees. Experts say the bill's progress will likely stall for now, but advise HR leaders to brush up on how the bill could amend the Fair Labor Standards Act.

Monday, June 3, 2013
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Legislation recently passed by the U.S. House of Representatives aims to help private-sector employees get closer to striking the type of work/life balance that many workers find hard to achieve. While experts predict the Working Families Flexibility Act isn't likely to make it through the Senate as currently constructed, the bill could someday amend the Fair Labor Standards Act in ways that employers and HR leaders should be prepared for.

Essentially, the Working Families Flexibility Act -- which passed by a vote of 223 to 204 -- provides private-sector employers the opportunity to offer employees the choice of banking 1.5 hours of compensatory time off for every overtime hour they work, or continuing to receive 1.5 times their hourly wage in overtime pay.          

Employers would need to document an eligible employee's agreement to participate in a comp time plan in writing in an otherwise verifiable record. An employee could not accrue more than 160 hours of comp time at any time.

The legislation is "designed to give both employers and employees more flexibility with the work schedule," says Jack Swetland, government affairs manager with Scottsdale, Ariz.-based WorldatWork.

Still, the legislation could be difficult for employers to get a handle on, says Wanda Holloway, a Houston-based partner in Reed Smith's employment and labor law practice.

"Like many aspects of the Fair Labor Standards Act and similar state laws, the concept embraced by [the Working Families Flexibility Act] seems deceptively simple, but can be difficult to implement, practically speaking. This is particularly important at a time when wage and hour litigation continues to be a huge issue for many employers," says Holloway.

"While the flexibility arguably provided by the proposed legislation would be attractive to many employees and employers, it could be quite difficult to administer, especially taken in conjunction with the myriad of other laws touching upon multiple time off and compensation programs."

 For employers and HR, it's important to note that the bill "does not create a new mandate," says Swetland. What it does, however, is "amend the Fair Labor Standards Act to allow private employers to offer their employees the option of earning comp time in lieu of overtime pay for overtime hours worked."

Under the bill, employers are not required to offer comp time instead of overtime pay, but may choose to do so, says Swetland. "The bill makes the comp-time option available only to those employees who have worked at least 1,000 hours in the previous one-year period," says Swetland. "If this legislation were to become law, HR leaders would need to consider how they would handle the administration of tracking accrued comp time."

However, the WFFA becoming law doesn't look too likely -- at least this year, says Ilyse Schuman, a Washington-based attorney with Littler Mendelson.

"Although the bill passed largely along party lines, I do not expect it to advance in the Senate during this Congress," says Schuman, who is also co-chair of the firm's Workplace Policy Institute. "The bill likely will continue to stall in the face of opposition contending that it would take away overtime protections from workers."

Indeed, "only three out of 199 Democrats voting supported the bill, and President Obama has threatened to veto it, neither of which bode well for [the bill] even being taken up in the Democratic-controlled Senate," adds Swetland, noting that the bill's chances for passing would greatly improve if Republicans were to gain control of the Senate in the 2014 elections.

If the bill does see passage -- in 2014 or beyond -- the legislation becoming law would present challenges that HR leaders should make themselves aware of, says Ted Boehm, an Atlanta-based attorney with Fisher & Phillips.

"Perhaps the most difficult challenge that the bill would present is calculating the rate of payment at cash-out times," says Boehm.

"The payment," he explains, "would be calculated at the higher of the employee's regular rate at the time the comp time was earned, or the employee's final regular rate."

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The "regular rate," however, is not necessarily the employee's stated hourly rate, adds Boehm.

"Typically, it also includes remuneration such as bonuses, commissions and compensation of many other kinds. Figuring the 'regular rate' for cashing out purposes could be a complex process as to employees who received such supplemental compensation over a period of time."

Another substantial concern for employers relates to employees' actual usage of comp time, continues Boehm.

"To some degree, conflict over requests to use accrued comp time may be unavoidable," he says. "An employee would be entitled to use comp time 'within a reasonable period' after requesting it, unless this would unduly disrupt the employer's operations."

While the bill does not make clear what constitutes a "reasonable period," it is "easy to envision an employee reacting negatively if and when a request is denied on either ground," says Boehm.

Employers would also be forced to decide whether to offer the comp time option, as well as developing, disseminating and implementing an appropriate policy, adds Schuman.

"[This] would necessitate proper training of managers and employees about the policy and how to avoid any abuse or misuse," she says. "As with any changes in the law, preparation and planning are the best way to ensure compliance."

Ultimately, the bill would force HR professionals "to be vigilant in their recordkeeping, and [to] keep good documentation on the choice that individual employees make between taking comp time and taking overtime pay," adds Swetland.

As the bill is currently written, employees can switch from taking comp time back to receiving overtime pay, or vice versa, he says.

"So, HR professionals have to be mindful of the bill's timeline of 30 days to implement the change in the employee's records. Individual employees also have some control in requesting a payout of their unused comp time balance, which must be paid by the employer within 30 days. This makes it even more important for HR professionals to keep records of leave balances up to date."

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