Change Coming Regarding Overtime Compensation?

May 26, 2017

Isaac Graff, Esq.

Ty Hyderally, Esq.

Non-exempt employees are required to be compensated for their overtime work.  Work in excess of 40 hours per week is considered overtime.  The Fair Labor Standards Act (“FLSA”) allows public sector employers to compensate their non-exempt employees for overtime by providing them with compensatory time off at a rate of no less than one and a half hours for each hour of overtime worked. 29 U.S. Code § 207(o).  In contrast, private sector employers may only compensate their employees by paying them at a rate of one and a half times their regular hourly rate of pay for each overtime hour worked.

However, private sector employees may soon be permitted to compensate their employees with the same time-and-a-half compensatory time off that public employers are currently permitted to provide.  Republican legislatures introduced the Working Families Flexibility Act of 2017 to Congress on February 16. 2017. (H.R. 1180, S. 801 ). The Act proposes to allow private sector employers to provide time-and-a-half off leave to compensate employees who have worked at least 1,000 hours in the preceding 12 months leading up to their time off.  Employees would be able to accumulate up to 160 hours of compensatory time off per year, and their employers would pay them for any unused compensation time off at the end of each year, or upon the employee severing ties with their employer.

The Act, as it is currently proposed, would require that the employee being compensated with time off must have knowingly and voluntarily entered into an agreement to such terms with their employer before working overtime hours.  Additionally, Employers would have to grant requests for time off within a reasonable period after the request is made, unless it would “unduly disrupt” the employer’s business and employers would have to provide 30-day advanced notice before discontinuing compensatory time off.

Employers would violate the Act if they “(1) interfere with the employee’s right to request or not to request compensatory time off in lieu of payment of monetary overtime compensation, or (2) require an employee to use such compensatory time.” https://www.congress.gov/bill/115th-congress/house-bill/1180.  Violators would be liable for the amount of compensation time accrued by the employee denied compensation, in addition to the same amount in liquidated damages, reduced for each hour of compensatory time that the employee used.

If the Act indeed goes through, the question then becomes whether New Jersey will follow suit regarding New Jersey’s Wage and Hour Law. (N.J.S.A. 34:11-56a et seq.)  In the past, New Jersey has adopted federal regulations regarding such matters as the exemption from overtime compensation for bona fide executive, administrative, professional or outside sales capacity employees.  It remains to be seen, if New Jersey would do the same regarding compensatory time-off.

The above blog post was written over one year ago. The information in this blog post may not be current due to changes in the law or recent case decisions. We encourage you to contact our firm, at 973-509-8500, for information on this particular post and to make sure the content is still current.

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