[Written for Replicon Vice President of Product Marketing for HR.com]
The latest in a string of potential overtime legislation in the United States, 2017’s Working Families Flexibility Act appears to be fairly straightforward at first glance. This new bill (which recently passed in the House, and is currently being considered by the Senate) aims to increase flexibility for workers classified as “nonexempt” from overtime pay, giving them the option to receive compensatory time off for working overtime hours, in lieu of the typical overtime wages.
And yet, organizations like the National Partnership for Women and Families continue to strongly oppose this otherwise seemingly family-friendly legislation, expressing doubt that it’s theoretical improvements in employee flexibility will actually manifest themselves in practice. This bill, they claim, could be easily exploited by employers to ultimately render their workers “less time, less money, and less flexibility.”
Difficulty adhering to existing labor laws has resulted in a dramatic increase in overtime lawsuits over the past few years alone, and it’s not unrealistic to assume that this new bill will bring on additional compliance difficulty for businesses. Should this act pass into law, your business should be prepared to implement this new overtime ruling in a way that benefits you and your employees. Below, I’ve outlined a few of the concerns that various organizations have voiced, and strategies for your business to address them head on, and lawsuit-free:
1. Employers will control comp time scheduling
The bill stipulates that workers can use their accrued comp time whenever they like, as long as their employer feels that their absence won’t “unduly disrupt” regular operations. Still, critics of the bill have rightly pointed out that “unduly disrupt” is a broad standard, and generally gives employers the power to define it as they see fit.
Accrued comp time is only valuable if employees have legitimate, meaningful access to it. Set up your own specific definitions for “unduly disrupt,” and ensure that these are widely shared and understood within your company. Don’t bury them in your employee handbook — make them doctrine. If you clearly specify the various scenarios in which employees can and can’t take comp time, then they still have the ability to reasonably plan their schedules and time off for the future, without the fear that their requests will be rejected.
2. Potentially reduced employee income
A substantial amount of workers in the US rely on overtime pay to make ends meet, but in accepting comp time instead of overtime wages, employees will essentially be loaning their employer their overtime pay for up to 13 months, with no interest. This isn’t a problem if employers are truly impartial to whether employees choose comp time or overtime pay as compensation, but it’s also possible that employers will start to assign overtime hours specifically to those who accept comp time over wages. Having a clear policy on acceptable overtime practices and creating a scalable culture will allow employees to feel that the company has their back rather than jumping at any cause for underpayment.
3. Increased potential for wage theft
The main purpose of the original overtime rules in the FLSA was to disincentivize companies from overworking their employees by making it more expensive for them to do so. But even with these FLSA stipulations in place, businesses reportedly still withhold billions of dollars of unpaid overtime compensation from their employees each year.
Critics of the “Working Families” act believe it has the potential to exacerbate this type of wage theft, making it easier for employers to avoid overtime payment obligations. Although the bill provides workers with the right to sue their employer if they are in any way coerced into requesting a comp time agreement instead of payment, this is an unrealistic option for your average American worker. Most people don’t have the time or money to sue their employer in court, nor would they want to risk being fired for making waves.
To ensure that overtime tracking and payment is kept as straightforward and honest as possible, consider investing in a worker time management solution with built-in compliance capabilities — essentially, a system that tracks non-exempt (and exempt, if needed) employee hours, and impartially calculates how many overtime hours each employee has worked. You should also make it abundantly clear that both comp time and traditional wages are viable options for payment. Having the data to set the impartiality as well as create a culture of adherence will allow businesses to run efficiently while allowing workers the flexibility they need and the control they want over their own schedule.