On February 10, 2009, Congresswoman Cathy McMorris Rodgers (R-Washington) again introduced the Family Friendly Workplace Act, which, if passed, would amend the Fair Labor Standards Act (FLSA) and authorize private employers to provide compensatory (or “comp”) time off in lieu of overtime pay.
For almost 20 years, the public sector has been using comp time, and for many public employees, it’s a very popular option. In fact, it seems that several private employers mistakenly believe they can implement similar policies in their own workplace. However, unless the Family Friendly Workplace Act is passed into law, private employers that use comp time are violating the FLSA.
Learn more about correctly classifying workers in the Wage and Hour Compliance Manual
Comp time not yet available in the private sector
Hourly employees must be compensated at a rate of one and one-half times their regular rate of pay for any hours worked in excess of 40 per week. However, public-sector employees may opt to receive comp time in lieu of overtime payments. The option is quite popular with workers. Perhaps your workplace has considered adopting some sort of flexible work schedule as well.
But private-sector employers that adopt comp time policies violate the FLSA and subject themselves to liability under the law. Unless the Family Friendly Workplace Act becomes law, private-sector employers have limited options when it comes to compensating employees with time off.
HR Hero Line article: Just say no to comp time
There is one option for private employers. It’s called “rearranged time,” and it’s permissible under the FLSA.
Rearranged time works something like this: Your employees typically work fixed hours for a fixed salary. Thus, every two weeks, they receive a paycheck for the same amount. With “rearranged time,” employees may work in excess of 40 hours during the first week of the pay period and reduce their work hours in the second week by one and one-half times the hours worked in excess of 40 during the previous week. The total hours worked during the two-week pay period may not exceed 80.
Rearranged time complies with the FLSA because as a practical matter, you are paying the employee overtime for the hours in excess of 40 worked during the pay period and adjusting his schedule the second week.
To illustrate, suppose an hourly employee working in your office earns $10 an hour and typically works 40 hours a week. In return, he receives a biweekly paycheck of $800. During week one of a pay period, a special project requires extra man-hours. The employee works an additional five hours during the first week and reduces his working hours the second week by 7.5 hours (or one and one-half times the five hours of overtime worked the previous week). At the end of the pay period, he will still earn his regular wages of $800. He earns $475 for his first week of the pay period, which includes overtime, and $325 for the second week — a total of $800.
Evaluate your organization’s comp time and other wage and hour practices with the Employment Practices Self Audit Workbook
Rearranged time may be an option for your workplace if you (or your employees) have circumstances that require a flexible work schedule. However, using rearranged time means adhering to strict limitations, so it’s particularly important to carefully supervise employees who adjust their work hours under this policy.