U.S. House of Representative passes comp time bill

On May 2, 2017, the U.S. House of Representatives passed a bill that would allow employees to be compensated for overtime with compensatory time, more often referred to as “comp time.” The bill was introduced by Representative Martha Roby, a Republican who represents Alabama’s second Congressional district. The second Congressional district is composed of Montgomery County and most of southeast Alabama.

Highlights of the bill

1. Instead of compensating employees with money for overtime at 1.5 times their hourly rate (frequently called time and a half), employees can be compensated with comp time at 1.5 the hours of overtime worked. In other words, for every hour of overtime, the employee will receive 1.5 hours of comp time.

2. No employee may accumulate more than 160 hours in comp time a year.

3. Employees are not eligible to receive comp time until they have worked for the employer at least 1,000 hours.

4. If employees don’t use their comp time, the employer must pay the employees for the time.

5. Employees may withdraw from such arrangements and be paid instead.

6. Employees must be paid for any unused comp time if they resign or get fired.

See the details of what would be called, if passed, the Working Families Flexibility Act.

Some common misunderstandings about “comp time”

I have often encountered employers who think they can compensate employees by using comp time under current law. They are incorrect.

Typical misunderstanding 1

Employers think, for example, that if an employee works 20 hours of overtime in January, the employee can be given 20 extra hours of vacation time to be used in June instead of paying the employee 1.5 times his or her hourly rate during the January pay period. This approach is incorrect—and illegal. The employee must be paid 1.5 times the regular hourly rate during January. There is nothing wrong with allowing the employee to have 20 extra hours of vacation time, whether paid or unpaid, in June, but the January overtime has to be paid.

Typical misunderstanding 2

Another approach I’ve encountered occurs when an employer has a 2-week pay period (80 hours over 2 weeks). The employer will pay for any overtime during the 2 week period, instead of over a 1 week period. For example, let’s assume the Acme Widget Company pays Ms. Jones a regular hourly rate of $10. Ms. Jones works 45 hours in first week and then works 35 hours in the second week. Since Ms. Jones has worked 80 hours for the 2 weeks, the employer calculates the pay as 80 × $10 or $800 for the 2 weeks. This calculation is also incorrect—and illegal.

Overtime is based on 7 consecutive days

Employers can set what day of the week the workweek begins, but it has to be 7 consecutive days (or 168 consecutive hours). So a workweek can run from Monday through Sunday, or a workweek can run from Saturday through Friday. A workweek can even begin at 12 noon on Friday and run until 12 noon on the next Friday. (And I’m not going to give you a headache by explaining what happens when an employer wants to change workweek schedules.)

Correct calculations

So the correct calculation of Ms. Jones paycheck is as follows:

Now let’s suppose Ms. Jones works 45 hours during week 1 and 40 hours during week 2. Here’s the proper calculation of her pay:

Some wiggle room for comp time within the 1-week period

Since the overtime rule is based on a single week, there is a little bit of wiggle room for “comp time” within a 7-day week (168 hours). Let’s assume Ms. Jones has the typical schedule of 8 a.m. to 5 p.m., Monday through Friday. (The schedule includes an hour off for lunch each day.) If she works an extra 2 hours on Monday (10 hours), she doesn’t have to be paid overtime if she takes off 2 hours early on Friday. In other words, overtime only applies when an employee works more than 40 hours during the 168-hour workweek.

Bill would be significant change in wage and hour law

That’s why this bill, if passed by the Senate and signed by President Trump, will be a significant change in wage and hour law. So stay tuned to the Third-Shift Employment Law Blog for further developments.

Items on this web page are general in nature. They cannot—and should not—replace consultation with a competent legal professional. Nothing on this web page should be considered rendering legal advice.

© 2017