Locke Lord QuickStudy: New Overtime Bill Offering Flexibility on How Overtime Work is Compensated Passes the House of Representatives

May 3, 2017

Yesterday, the US House of Representatives passed a bill that could provide both union and private employers and employees more flexibility when it comes to working overtime hours (hours over 40 in a workweek) and how such overtime work is compensated.  The “Working Families Flexibility Act,” which passed the house by a vote of 229-197, would alter the Fair Labor Standards Act to allow certain employees to choose to take paid time off, or “comp time,” rather than overtime pay when working more than 40 hours in a week.  Specifically, the new bill would add the following language to the existing Fair Labor Standards Act (in part):

1. GENERAL RULE.—An employee may receive, in accordance with this subsection and in lieu of monetary overtime compensation, compensatory time off at a rate not less than one and one-half hours for each hour of employment for which overtime compensation is required by this section.

2. CONDITIONS.—An employer may provide compensatory time to employees under paragraph (1) only if such time is provided in accordance with—

(A) applicable provisions of a collective bargaining agreement between the employer and the labor organization that has been certified or recognized as the representative of the employees under applicable law; or 

(B) in the case of an employee who is not represented by a labor organization that has been certified or recognized as the representative of such employee under applicable law, an agreement arrived at between the employer and employee before the performance of the work and affirmed by a written or otherwise verifiable record maintained in accordance with section 11(c)— 

(i) in which the employer has offered and the employee has chosen to receive compensatory time in lieu of monetary overtime compensation; and 

(ii) entered into knowingly and voluntarily by such employee and not as a condition of employment.

No employee may receive or agree to receive compensatory time off under this subsection unless the employee has worked at least 1,000 hours for the employee’s employer during a period of continuous employment with the employer in the 12-month period before the date of agreement or receipt of compensatory time off.

H.R.1180 — 115th Congress (2017-2018).

Thus, employees would have the opportunity to choose to receive additional paid time off as an alternative to overtime pay (time and a half of an employee’s regularly hourly rate for all hours worked over 40 in a workweek) if they had an agreement with their employer to do so.  Notably, this option has long been available to employees of the federal government.  

The bill passed the House yesterday, and given that this bill was proposed by Republicans and was essentially passed by the House on party lines, there is a possibility this bill could pass the Senate as well. That said, Republicans only hold 52 seats in the Senate currently, and may need eight Democrats to vote in favor of the legislation to avoid a filibuster. The Trump Administration has advocated for this legislation, with The White House stating in a news release that the president's advisers would recommend that President Trump sign the bill into law if it was presented to him in its current form. Notably, a similar proposal was passed by the House of Representatives in 2013 and endorsed in the Senate with the backing of then-Senator Kelly Ayotte, R-N.H., and then-Minority Leader Senator (and current Senate Majority Leader) Mitch McConnell, but was ultimately not passed by a Democratic-led Senate.

Litigation related to the FLSA and equivalent state laws has been very prevalent in recent years, with plaintiffs’ attorneys being drawn to these cases due to the relative ease of getting such cases certified as class or collective actions, as well as favorable remedies available to employees, including unpaid overtime wages, liquidated (double) damages and statutory-mandated attorneys’ fees. In addition, federal and state agencies have been conducting regular investigations into the overtime pay practices of employers, particularly in the energy and construction sector.  Therefore, this issue is something all employers should be aware of and keep tabs on.

The passage of this bill could be a significant event for energy employers, as well as employers in general, who are often looking at flexibility in budgeting for and managing overtime expenses. Stay tuned.