In early May 2017, the U.S. House of Representatives passed the Working Families Flexibility Act of 2017 in the hope of giving both employers and their workers new ways of handling compensation for overtime hours. The bill passed mainly along party lines, though six Republicans did side with their Democratic allies to vote against the bill. Now that the bill has made it through the House, what does that mean for you?
First and foremost, there is no need to begin revamping your payroll system right now. The bill faces a much tougher debate in the Senate. The Senate version has 18 cosponsors from both sides of the aisle, but must first pass committee muster before going to the full Senate floor. Any bill to go to the president's desk would have to make it through the reconciliation process as well.
Here are the most important provisions you need to know as the legislation now stands:
Comp Time Instead of Overtime Pay
The first thing to know is what the legislation actually establishes. Both versions of the bill create an option, at the federal level, to substitute future time off for overtime pay if both employer and employee agree to it. In other words, any hours worked in excess of 40 currently require time-and-a-half pay. With the new comp time rule in place, employees could elect to forgo that extra pay in favor of an equal amount of time off in the future – as long as the employer offers the option.
Participation Would Be Voluntary
The legislation in no way establishes mandates. First, employers will not be required to offer the comp time alternative. Some experts are saying that the vast majority of companies affected by the rule will probably not due to the change in time and attendance tracking that would be required to pull it off.
Second, employees would not be required to accept comp time over extra pay if their employers offered it. The legislation stipulates that employees ultimately get to decide how they will be compensated for overtime.
Both versions of the legislation explicitly prohibit employers from forcing workers to accept comp time or in any way manipulating or coercing them to do so. Stiff penalties have been put in place to ensure employer compliance. For example, an employer caught trying to coerce workers into accepting comp time could end up paying those employees double pay as a result.
Time and Attendance Tracking
Employers are already required to keep meticulous records regarding time and attendance. Any company electing to offer comp time in the future would have to ensure that its tracking capabilities are up to the task. Offering the option is good reason to consider transitioning to an online payroll system that includes digital tracking of time and attendance.
The comp time option would not only mean continuing to track all overtime hours worked, but also tracking how comp time is 'redeemed'. An online payroll solution with digital time tracking would accommodate the changes with a few simple modifications to underlying code. A digital system would certainly make tracking comp time a lot easier as compared to paper tracking.
Whether the Senate passes their version of the bill or not remains to be seen. To say there are no guarantees is to state the obvious. If it does pass though, the president has already signaled a willingness to sign it provided the reconciliation process does not gut the legislation's basic priorities. If and when that happens, we will advise our clients as to how to best respond.