Substitution For Overtime Pay
Congress Considers
Flex-Time Legislation
by Jonathan Yarowsky
NATO Washington Counsel
Among the various labor-related issues pending in Congress,
the consideration of compensatory – or “comp” – time
legislation has become a top tier issue for both the House
and the Senate. As you are aware, comp time is generally
a policy allowing employers to offer employees vacation
days or time off instead of paying them overtime wages.
Comp time would accrue at the same rate as the overtime
pay would accrue. Below we provide a brief overview of
the issues surrounding the debate.
Background: The Fair Labor Standards Act
(FLSA) of 1938 governs overtime pay. The act requires that
hours of work
by “non-exempt employees” over 40 hours a week
must be compensated at a rate of 1.5 times the employee’s
regular rate of pay. The FLSA does, however, include exemptions
to the “40-hour work week” rules for certain
types and places of employment, including a specific reference
to motion picture theatres.
While the bill does not currently include language
altering the treatment of motion picture theatres under
the FLSA, H.R. 1119 could become a vehicle for such
change. For this reason, we will monitor the legislation
closely. |
To that end, the FLSA, as amended in 1966,
expressly exempts from the overtime provisions of the act “any employee employed by an establishment which
is a motion picture theatre,” with the Department of Labor implementation
regulations defining the term “motion picture theatre” as “a
commercially operated theatre primarily engaged in the exhibition of motion
pictures with or without vaudeville presentations, including open air and drive-in
theatres.”
Other parts of the FLSA expressly exempt
certain employees from the overtime provisions of the act,
including “any employee employed in a bona fide
executive, administrative, or professional capacity,” provided they
meet certain tests regarding job duties and responsibilities, including management
duties and decision-making authority, and are compensated on a salary basis.
Increasingly, however, a number of members
of Congress have begun to question whether the FLSA should
be amended to deal with the rising political concern
that long work hours and the consistent pursuit of overtime pay may be
weakening the American family by decreasing the amount
of time parents spend with their
families outside the workplace.
108th Congress Action: On
March 6, Rep. Judy Biggert (R-Ill.) introduced H.R. 1119,
the Family
Time Flexibility Act. Hearings have been held by
the House
Education and Workforce Committee and the bill has been reported for
consideration by the full House.
H.R. 1119 would amend the FLSA to permit
private sector employers to offer their employees the option
to receive overtime pay in the form
of paid
compensatory time in lieu of cash wages. Under such provisions, the
bill would require
an employer and employee to reach an express, mutual agreement prior
to the performance
of the overtime. If either the employee or the employer did not so
agree, then the overtime pay would be in the form of cash
compensation. The
bill allows
for two types of such agreements: 1) where the employee is represented
by a recognized or certified labor organization, the understanding
must be contained
in the collective bargaining agreement between the employer and the
recognized or certified labor organization; 2) where the
employee is not represented
by
a recognized or certified labor organization, the agreement must be
made between the employer and the individual employee.
However, in this latter
case, the
bill prohibits entering into such an agreement as a condition of employment.
At the same time, to be eligible for the
option of compensatory time,
an employee would have to show that he or she worked at least 1,000
hours in a period of
continuous employment with the employer during the 12-month period
preceding the date that the employee would be able to receive “comp time.”
Similar legislation has passed the full
House twice in the last seven years, first in 1996 and
then again in 1997. The Senate has yet to
act on such
a proposal. While supporters of the bill contend that the legislation
will allow overtime
workers to spend more time at home and allow greater out-of-the-workplace
flexibility to working parents, opponents remain concerned that the
use of
comp time in
lieu of overtime pay may actually decrease worker options by allowing
employers to coerce employees to take comp time over overtime pay,
thus saving the
employer cash outlays.
For NATO members, there are a variety of
issues related to this legislation to be considered. Most
importantly, while the bill does not currently
include language altering the treatment of motion picture theatres
under the FLSA,
H.R. 1119 could become a vehicle for such change. For this reason,
we will monitor the legislation closely.
Additionally, to the extent that there are theatre employees who
are not covered by the current exemption, H.R. 1119 would offer
the option
of comp
time versus
overtime pay to those employees. Again, the bill does not alter
this relationship for exempt employees (in fact, exempt employees
currently
are often offered
greater flexibility in their schedules). Rather, the legislation
purports to “even
the playing field” by offering similar options to non-exempt
employees.
There may also be some burdensome administrative
costs for employers
under the provisions of this bill surrounding the formal agreements
that would
have to be made with each employee, such as costs associated
with any creation or
upgrade of current time keeping, and/or payroll applications
necessary to manage this new requirement.
Finally, while H.R. 1119 would not itself
alter the playing field for theatre owners, it could have
an impact on how state legislators
approach
this
issue, which we will need to monitor as well. 
