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Proposed bill would allow employers to pay for overtime with time off

When an employee chooses to work overtime, the employee will typically assume that he or she will be paid time and a half for the extra hours put in that week. Recently, lawmakers in the U.S. House of Representatives introduced a bill that would change the way overtime can be compensated by employers.

The law would allow employers in the private sector to pay employees for overtime with time off, rather than the typical monetary incentive. If the bill were to pass, employees could then be compensated with 1.5 hours of time off for every hour of overtime worked in a given week.

The bill - called the Working Families Flexibility Act - would allow employees to earn up to 160 hours of time off annually. Whether the bill would actually help families is up for debate, however.

Proponents of the bill claim that it would provide employees with added flexibility, allowing them to take additional time off during the year. Opponents of the bill point out that the bill places many restrictions on when the time off can be used.

Under the bill, employers and employees would both have to agree to compensating overtime through time off. If someone on either side changed his or her mind, the plan could be cancelled in one month's time.

When both parties agreed to the plan, employees would be required to use their time off during a one-year period. If they failed to use the time, they would be paid for the time within one month. A representative of the Education and Workforce Committee Democrats has argued that the plan is essentially an "interest-free loan" for the employer, as the employee may not receive the time off from the overtime worked until a year after the work was performed.

Source: Thomson Reuters, "Proposed legislation would extend comp time to private sector," Amanda Becker, April 12, 2013.

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