How Does the New Working Families Act Affect Your Business?

Julie Shenkman
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The Working Families Flexibility Act of 2017 involves some major changes to the Fair Labor Standards Act, allowing workers in the private sector to receive paid time off instead of overtime pay for working overtime hours. Despite already being commonplace in the public sector, this overhaul has left many businesses wondering how the new arrangements might affect them financially. As it turns out, the changes may be beneficial for employer and employee alike.

Voluntary Participation on Both Sides

Employees who want paid time off, also known as comp time, rather than traditional overtime pay have to make arrangements with their employer voluntarily and with full knowledge of the situation. However, under the Working Families Flexibility Act, the employer has no obligation to agree to a comp-time arrangement and can continue to pay overtime wages. Keep in mind this flexibility option isn't available for new employees as workers must have worked at least 1,000 hours to participate.

You and Your Employees Can Back Out

According to the Working Families Flexibility Act, if you make a comp-time agreement with workers, which is done in writing, they can always choose to withdraw from the agreement to receive cash wages of time-and-a-half overtime pay. As an employer, you can also back out from the agreement, as long as you give your employees 30 days' notice.

Your Employees Can Use Their Comp Time When They Please

Contrary to rumors, employers don't get to choose when workers can use their comp time. Employees can take their time off whenever they want as long as it isn't overly disruptive to the business and they give reasonable notice. The provision of being "unduly disruptive" to business is the same as that used in public sector comp-time arrangements, which have been in place for more than 30 years.

You Have to Pay Up

If employees accrue unused comp time, they can cash out at any time without question. Per the Working Families Flexibility Act, your business must pay up the requested overtime wages within 30 days, and you must pay every employee for unused comp time from the previous year by Jan. 31 of each year.

Possible Legal Consequences

The free choice aspect of the Working Families Flexibility Act is crucial, meaning that if any employer tries to manipulate or coerce employees into choosing comp time instead of overtime, the Department of Labor is sure to come down on the business in full force. In this case, the employer would owe double damages. Employees are free to contact the Department of Labor whenever they believe their employer is treating them unfairly.

Aside from these major changes introduced by the Working Families Flexibility Act, the Fair Labor Standards Act remains largely the same. Both businesses and employees are free to participate in comp-time agreements, and they can always back out. Consider the possibility of a comp-time agreement to see if it makes sense for you and your workers.


Photo courtesy of imagerymajestic at FreeDigitalPhotos.net

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