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The Working Families Flexibility Act of 2013

The Working Families Flexibility Act of 2013 (“Act”), which would amend the Fair Labor Standards Act of 1938 (“FLSA”), was passed by the House of Representatives on May 8, 2013, and has now been introduced into the Senate.  This Act would amend the FLSA to allow private sector employers to provide compensatory time off in lieu of paying overtime compensation when a non-exempt employee works over forty (40) hours in a workweek.

The FLSA sets forth minimum wage and overtime pay requirements for most employers.  Currently the FLSA provides that all private sector, non-exempt employees who work more than forty (40) hours in a work week must be paid at a rate of time and one half for each hour worked over forty (40).  The proposed amendment provides that an employer may offer employees the opportunity to accrue compensatory time at a rate of one and one half hours per overtime hour in lieu of monetary compensation.  

The Act would allow compensatory time only if there was a collective bargaining agreement in place or there was an express and verifiable, preferably written, agreement between the employee and employer regarding the compensatory time.   In order for an employee to be eligible to accept compensatory time off, the employee must have worked at least 1,000 hours for the employer over the twelve (12) months prior to signing the agreement or prior to receipt of any compensatory time.

Any employee who would choose to accumulate compensatory time instead of overtime pay would only be permitted to accrue up to one hundred and sixty (160) hours at any time.   The proposed Act also requires that, no later than January 31st of each year, employers provide monetary payment for any unused compensatory time remaining at the end of the previous calendar year.  This accrued time must be paid at the overtime rate which was in effect when the employee accrued the compensatory time or the rate of overtime pay at the time it is paid, whichever is higher.   Accrued time would also be payable upon termination of employment.

The Act requires that all employers provide employees with thirty (30) days notice prior to discounting the compensatory program.   It also allows an employer, after providing thirty (30) days’ notice to an employee, to pay monetary compensation in lieu of compensatory time for any unused time in excess of eighty (80) hours.  Employees would be permitted, at any time, to demand payment for any accrued, but unused, compensatory time.  The employer must provide payment within thirty (30) days of the receipt of a written request.

The proposed Act prohibits any employer from, directly or indirectly, intimidating, threatening, coercing or attempting to do any of the forgoing, any employee for either requesting, or not requesting, compensatory time in lieu of monetary payment or requiring  that an employee uses earned compensatory time.   Any violation of this prohibition would make an employer liable to the employee for an amount equal to the monetary overtime compensation rate for each hour of compensatory time accrued, plus liquidated damages of an equal amount.

Currently, even though private sector employer may only pay overtime compensation in monetary wages, state and local public employees have the option of receiving compensatory time off in lieu of monetary compensation.  Federal employees are permitted to take compensatory time off under the Federal Employees Flexible and Compressed Work Schedules Act (1978).  The enactment of The Working Families Flexibility Act of 2013, would provide private sector employees with similar options to those that are currently available to public and federal employees.

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