[House Report 113-49]
[From the U.S. Government Publishing Office]
113th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 113-49
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WORKING FAMILIES FLEXIBILITY ACT OF 2013
_______
April 30, 2013.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Kline, from the Committee on Education and the Workforce, submitted
the following
R E P O R T
together with
MINORITY VIEWS
[To accompany H.R. 1406]
[Including cost estimate of the Congressional Budget Office]
The Committee on Education and the Workforce, to whom was
referred the bill (H.R. 1406) to amend the Fair Labor Standards
Act of 1938 to provide compensatory time for employees in the
private sector, having considered the same, report favorably
thereon with an amendment and recommend that the bill as
amended do pass.
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Working Families Flexibility Act of
2013''.
SEC. 2. COMPENSATORY TIME.
Section 7 of the Fair Labor Standards Act of 1938 (29 U.S.C. 207) is
amended by adding at the end the following:
``(s) Compensatory Time Off for Private Employees.--
``(1) General rule.--An employee may receive, in accordance
with this subsection and in lieu of monetary overtime
compensation, compensatory time off at a rate not less than one
and one-half hours for each hour of employment for which
overtime compensation is required by this section.
``(2) Conditions.--An employer may provide compensatory time
to employees under paragraph (1)(A) only if such time is
provided in accordance with--
``(A) applicable provisions of a collective
bargaining agreement between the employer and the labor
organization that has been certified or recognized as
the representative of the employees under applicable
law; or
``(B) in the case of employees who are not
represented by a labor organization that has been
certified or recognized as the representative of such
employees under applicable law, an agreement arrived at
between the employer and employee before the
performance of the work and affirmed by a written or
otherwise verifiable record maintained in accordance
with section 11(c)--
``(i) in which the employer has offered and
the employee has chosen to receive compensatory
time in lieu of monetary overtime compensation;
and
``(ii) entered into knowingly and voluntarily
by such employees and not as a condition of
employment.
No employee may receive or agree to receive compensatory time
off under this subsection unless the employee has worked at
least 1,000 hours for the employee's employer during a period
of continuous employment with the employer in the 12-month
period before the date of agreement or receipt of compensatory
time off.
``(3) Hour limit.--
``(A) Maximum hours.--An employee may accrue not more
than 160 hours of compensatory time.
``(B) Compensation date.--Not later than January 31
of each calendar year, the employee's employer shall
provide monetary compensation for any unused
compensatory time off accrued during the preceding
calendar year that was not used prior to December 31 of
the preceding year at the rate prescribed by paragraph
(6). An employer may designate and communicate to the
employer's employees a 12-month period other than the
calendar year, in which case such compensation shall be
provided not later than 31 days after the end of such
12-month period.
``(C) Excess of 80 hours.--The employer may provide
monetary compensation for an employee's unused
compensatory time in excess of 80 hours at any time
after giving the employee at least 30 days notice. Such
compensation shall be provided at the rate prescribed
by paragraph (6).
``(D) Policy.--Except where a collective bargaining
agreement provides otherwise, an employer that has
adopted a policy offering compensatory time to
employees may discontinue such policy upon giving
employees 30 days notice.
``(E) Written request.--An employee may withdraw an
agreement described in paragraph (2)(B) at any time. An
employee may also request in writing that monetary
compensation be provided, at any time, for all
compensatory time accrued that has not yet been used.
Within 30 days of receiving the written request, the
employer shall provide the employee the monetary
compensation due in accordance with paragraph (6).
``(4) Private employer actions.--An employer that provides
compensatory time under paragraph (1) to employees shall not
directly or indirectly intimidate, threaten, or coerce or
attempt to intimidate, threaten, or coerce any employee for the
purpose of--
``(A) interfering with such employee's rights under
this subsection to request or not request compensatory
time off in lieu of payment of monetary overtime
compensation for overtime hours; or
``(B) requiring any employee to use such compensatory
time.
``(5) Termination of employment.--An employee who has accrued
compensatory time off authorized to be provided under paragraph
(1) shall, upon the voluntary or involuntary termination of
employment, be paid for the unused compensatory time in
accordance with paragraph (6).
``(6) Rate of compensation.--
``(A) General rule.--If compensation is to be paid to
an employee for accrued compensatory time off, such
compensation shall be paid at a rate of compensation
not less than--
``(i) the regular rate received by such
employee when the compensatory time was earned;
or
``(ii) the final regular rate received by
such employee,
whichever is higher.
``(B) Consideration of payment.--Any payment owed to
an employee under this subsection for unused
compensatory time shall be considered unpaid overtime
compensation.
``(7) Use of time.--An employee--
``(A) who has accrued compensatory time off
authorized to be provided under paragraph (1); and
``(B) who has requested the use of such compensatory
time,
shall be permitted by the employee's employer to use such time
within a reasonable period after making the request if the use
of the compensatory time does not unduly disrupt the operations
of the employer.
``(8) Definitions.--For purposes of this subsection--
``(A) the term `employee' does not include an
employee of a public agency; and
``(B) the terms `overtime compensation' and
`compensatory time' shall have the meanings given such
terms by subsection (o)(7).''.
SEC. 3. REMEDIES.
Section 16 of the Fair Labor Standards Act of 1938 (29 U.S.C. 216) is
amended--
(1) in subsection (b), by striking ``(b) Any employer'' and
inserting ``(b) Except as provided in subsection (f), any
employer''; and
(2) by adding at the end the following:
``(f) An employer that violates section 7(s)(4) shall be liable to
the employee affected in the amount of the rate of compensation
(determined in accordance with section 7(s)(6)(A)) for each hour of
compensatory time accrued by the employee and in an additional equal
amount as liquidated damages reduced by the amount of such rate of
compensation for each hour of compensatory time used by such
employee.''.
SEC. 4. NOTICE TO EMPLOYEES.
Not later than 30 days after the date of enactment of this Act, the
Secretary of Labor shall revise the materials the Secretary provides,
under regulations published in section 516.4 of title 29, Code of
Federal Regulations, to employers for purposes of a notice explaining
the Fair Labor Standards Act of 1938 to employees so that such notice
reflects the amendments made to such Act by this Act.
SEC. 5. SUNSET.
This Act and the amendments made by this Act shall expire 5 years
after the date of enactment of this Act.
H.R. 1406, WORKING FAMILIES FLEXIBILITY ACT OF 2013, COMMITTEE REPORT
Purpose
The purpose of H.R. 1406, the Working Families Flexibility
Act of 2013, is to amend the Fair Labor Standards Act of 1938
to provide compensatory time for employees in the private-
sector.
Committee Action
104TH CONGRESS
The committee's consideration of policies to allow
compensatory time for private-sector employees began during the
104th Congress. As part of a series of oversight hearings on
the Fair Labor Standards Act of 1938 (FLSA), the Subcommittee
on Workforce Protections held a hearing on June 8, 1995 on
amending the FLSA to provide private-sector employers the
option of allowing their employees to voluntarily choose to
take compensatory time off in lieu of overtime pay. The
following individuals testified at the hearing: Ms. Arlyce
Robinson, Administrative Support Coordinator, Computer Sciences
Corporation, Falls Church, Virginia; Ms. Kathleen M. Fairall,
Senior Human Resource Representative, Timken Company, Randolph
County, North Carolina; Ms. Sandie Moneypenny, Process
Technician, Timken Company, Randolph County, North Carolina;
Dr. M. Edith Rasell, Economist, Economic Policy Institute,
Washington, D.C.; and Mr. Michael T. Leibig, Attorney-at-Law,
Zwerdling, Paul, Leibig, Kahn, Thompson & Wolly, P.C., Fairfax,
Virginia.
On November 1, 1995 the Subcommittee on Workforce
Protections held a hearing on H.R. 2391, a bill introduced by
Representative Cass Ballenger to amend the FLSA to provide
compensatory time for private-sector employees. The following
witnesses testified at the hearing: Mr. Pete Peterson, Senior
Vice President of Personnel, Hewlett-Packard Company, Palo
Alto, California; Ms. Debbie McKay, Administrative Specialist,
PRC, Inc., McLean, Virginia; and Mr. Michael T. Leibig,
Attorney-at-Law, Zwerdling, Paul, Leibig, Kahn, Thompson &
Wolly, P.C., Fairfax, Virginia.
On December 13, 1995 the Subcommittee on Workforce
Protections approved H.R. 2391, as amended, by voice vote and
ordered the bill favorably reported to the full committee. On
June 26, 1996 the Committee on Economic and Educational
Opportunities approved H.R. 2391, as amended, by voice vote and
ordered the bill favorably reported by a roll call vote of 20
yeas and 16 nays. H.R. 2391 was passed by the House, as
amended, on July 30, 1996 but was not acted on by the Senate
prior to the adjournment of the 104th Congress.
105TH CONGRESS
On January 7, 1997 Representative Cass Ballenger introduced
H.R. 1, the Working Families Flexibility Act. The Subcommittee
on Workforce Protections held a hearing on H.R. 1 on February
5, 1997. The following individuals testified at the hearing:
the Honorable Kay Granger, Member of Congress representing the
12th district of Texas; the Honorable Tillie Fowler, Member of
Congress representing the 4th district of Florida; the
Honorable Sue Myrick, Member of Congress representing the 9th
district of North Carolina; Ms. Christine Korzendorfer,
Manassas, Virginia; Mr. Peter Faust, Clear Lake, Iowa; Ms.
Linda M. Smith, Miami, Florida; Dr. Roosevelt Thomas, Vice
President of Human Resources and Affirmative Action, University
of Miami, Coral Gables, Florida, testifying on behalf of the
College and University Personnel Association; Ms. Diana
Furchtgott-Roth, Resident Fellow at the American Enterprise
Institute for Public Policy Research, Washington, D.C.; Mr.
Robert D. Weisman, Attorney-at-Law, Schottenstein Zox & Dunn,
Columbus, Ohio; Mr. Russell Gunter, Attorney-at-Law, testifying
on behalf of the Society for Human Resource Management (SHRM),
Alexandria, Virginia; Ms. Karen Nussbaum, Director, AFL-CIO
Working Women's Project, Washington, D.C.; and Ms. Helen
Norton, Director of Equal Opportunity Programs, Women's Legal
Defense Fund, Washington, D.C.
On March 5, 1997 the Committee on Education and the
Workforce discharged the Subcommittee on Workforce Protections
from further consideration of the bill and favorably reported
H.R. 1, as amended, by a roll call vote of 23 yeas and 17 nays.
H.R. 1 was passed by the House, as amended, on March 19, 1997
but was not acted on by the Senate prior to the adjournment of
the 105th Congress.
106TH CONGRESS
On April 13, 1999 Representative Cass Ballenger introduced
H.R. 1380, the Working Families Flexibility Act, which was
identical to H.R. 1 as passed by the House during the 105th
Congress. The bill was referred to the Committee on Education
and the Workforce; however, no action was taken on the
legislation.
107TH CONGRESS
On May 24, 2001 Representative Judy Biggert introduced H.R.
1982, the Working Families Flexibility Act. The bill was
identical to H.R. 1 as passed by the House during the 105th
Congress. While no action was taken on H.R. 1982, the
Subcommittee on Workforce Protections held two hearings
focusing on the issue of increasing workplace flexibility under
the FLSA.
On March 6, 2002 the following individuals testified before
the subcommittee: Mr. Ronald Bird, Chief Economist, Employment
Policy Foundation, Washington, D.C.; Dr. Carl E. Van Horn,
Professor and Director, John J. Heldrich Center for Workforce
Development, Rutgers, the State University of New Jersey, New
Brunswick, New Jersey; Mr. William J. Kilberg, Senior Partner,
Gibson, Dunn & Crutcher, LLP, Washington, D.C., testifying on
behalf of the U.S. Chamber of Commerce; and Ms. Judith M.
Conti, Co-Founder and Director, Legal Services and
Administration, D.C. Employment Justice Center, Washington,
D.C.
On May 15, 2002 the following individuals testified before
the subcommittee: Mr. Donald J. Winstead, Acting Associate
Director for Workforce Compensation and Performance, U.S.
Office of Personnel Management, Washington, D.C.; Mr. Andy
Brantley, Associate Vice President for Human Resources,
University of Georgia, Athens, Georgia, testifying on behalf of
the College and University Professional Association for Human
Resources (CUPA-HR); Mr. Thomas M. Anderson, J.D., SPHR, Human
Resources Director, Fort Bend County, Rosenberg, Texas,
testifying on behalf of SHRM; and Mr. Dennis Slocumb, Executive
Vice President and Legislative Director, International Union of
Police Associations, AFL-CIO, Alexandria, Virginia.
108TH CONGRESS
On March 6, 2003 Representative Judy Biggert introduced
H.R. 1119, the Family Time Flexibility Act, which was identical
to H.R. 1 as passed by the House during the 105th Congress.
The Subcommittee on Workforce Protections held one hearing
on the legislation on March 12, 2003. The following individuals
testified at the hearing: Mr. Houston L. Williams, Chairman and
CEO, PNS, Inc., San Jose, California, testifying on behalf of
the U.S. Chamber of Commerce; Ms. Terri Martell, Electrician,
Eastman Kodak Company, Wayland, New York; Ms. Ellen Bravo,
National Director, Nine to Five: National Association of
Working Women, Milwaukee, Wisconsin; and Mr. John A. Dantico,
SPHR, CCP, Principal of Compensation/HR Consulting, The HR
Group, Northbrook, Illinois, testifying on behalf of SHRM.
On April 3, 2003 the Subcommittee on Workforce Protections
favorably reported H.R. 1119, without amendment, to the full
committee by a roll call vote of 8 yeas and 6 nays. On April 9,
2003 the Committee on Education and the Workforce approved H.R.
1119, without amendment, and ordered the bill favorably
reported to the House by a roll call vote of 27 yeas and 22
nays. However, the House did not act on H.R. 1119 prior to the
adjournment of the 108th Congress.
110TH CONGRESS
On May 13, 2008 Representative Cathy McMorris Rodgers
introduced H.R. 6025, the Family-Friendly Workplace Act, which
was identical to H.R. 1 as passed by the House during the 105th
Congress. The bill was referred to the Committee on Education
and Labor; however, no action was taken on the legislation.
111TH CONGRESS
On February 10, 2009 Representative Cathy McMorris Rodgers
reintroduced the Family-Friendly Workplace Act, H.R. 933, which
was identical to H.R. 1 as passed by the House during the 105th
Congress. The bill was referred to the Subcommittee on
Workforce Protections; however, no action was taken on the
legislation.
113TH CONGRESS
On April 9, 2013 Representative Martha Roby introduced H.R.
1406, the Working Families Flexibility Act of 2013, which was
identical to H.R. 1 as passed by the House during the 105th
Congress. The bill was referred to the Committee on Education
and the Workforce.
On April 11, 2013 the Subcommittee on Workforce Protections
held a hearing on H.R. 1406. The following individuals
testified at the hearing: Mr. Andy Brantley, President and
Chief Executive Officer, CUPA-HR, Knoxville, Tennessee; Ms.
Karen DeLoach, Montgomery, Alabama; Ms. Juanita Phillips,
Director of Human Resources, Intuitive Research and Technology
Corporation, Huntsville, Alabama, testifying on behalf of SHRM;
and Ms. Judith Lichtman, Senior Advisor, National Partnership
for Women & Families, Washington, D.C.
On April 17, 2013 the Committee on Education and the
Workforce considered H.R. 1406. Representative Roby offered an
amendment in the nature of a substitute, which made technical
changes to the legislation. The committee favorably reported
H.R. 1406, as amended, to the House of Representatives by a
roll call vote of 23 yeas and 14 nays.
Summary
H.R. 1406 would give private-sector employers and employees
an option under the FLSA that federal, state, and local
governments have had for many years. H.R. 1406 would not affect
the compensatory time provisions already applicable to
employees of federal, state, and local governments. The bill
would permit private-sector employers to offer their employees
the option of selecting compensatory time off in lieu of
receiving cash overtime wages. An employee would be able to
choose, based upon an agreement with his or her employer, to
have his or her overtime compensated with paid time off.
The bill would not change the 40-hour workweek to affect
the manner in which overtime is calculated. ``Non-exempt''
employees who work more than 40 hours within a seven-day period
would continue to receive overtime compensation at a rate not
less than one and one-half times an employee's regular rate of
pay. If an employer and an employee agree on compensatory time,
then the paid time off would be granted at the rate of not less
than one and one-half hours for each hour of overtime worked.
H.R. 1406 would provide new employee protections, in
addition to those contained in current law, to prevent the
coercive use of compensatory time. The bill requires any
arrangement for the use of compensatory time to be an express
mutual agreement between the employer and the employee. In the
case of employees represented by a recognized or certified
labor organization, the agreement must be between the employer
and the labor organization. In other cases, the agreement is
with an individual employee, must be entered into knowingly and
voluntarily by the employee, and may not be a condition of
employment.
To be eligible to choose compensatory time, an employee
must have worked at least 1,000 hours in a period of continuous
employment with the employer during the 12-month period
preceding the date the employee agrees to receive or receives
compensatory time.
An agreement for the use of compensatory time between an
individual employee and his or her employer must be affirmed by
a written or otherwise verifiable statement. The agreement must
be made, kept, and preserved in accordance with the
recordkeeping requirements under Section 11(c) of the Fair
Labor Standards Act.\1\
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\1\29 U.S.C. Sec. 211(c).
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An employee could accrue up to 160 hours of compensatory
time each year. Any accrued compensatory time that has not been
used by the employee by the end of each year (or an alternative
12-month period as designated by the employer) must be paid for
by the employer to the employee in the form of monetary
compensation. Likewise, any unused accrued compensatory time
would be cashed out at the end of an employee's employment with
the employer, whether voluntary or involuntary. At any time, an
employee may also submit a written request to receive monetary
compensation for accrued compensatory time. In all cases, the
compensatory time would be cashed out at either the regular
rate received by the employee when the compensatory time was
earned or at the final regular rate received by the employee,
whichever is higher.
An employee may submit a written request to withdraw from a
compensatory time agreement with his or her employer at any
time. Within 30 days of receiving such a request, the employer
shall provide the employee with monetary compensation for the
accrued compensatory time.
A private-sector employer must provide an employee with 30
days' notice prior to cashing out an employee's accrued
compensatory time. However, an employer may only cash out
compensatory time accrued by an employee in excess of 80 hours,
unless the cash out is employee-initiated. A private-sector
employer must also provide employees with 30 days' notice prior
to discontinuing a policy of offering compensatory time to
employees.
Any accrued compensatory time would be considered to be the
same as wages owed to the employee. For the purposes of
enforcement, as with any other violation of the FLSA, all of
the remedies under the law would apply. In addition, any
employer who directly or indirectly intimidates, threatens, or
coerces any employee into selecting compensatory time off in
lieu of cash compensation, or who forces an employee to use
accrued compensatory time would be liable to the employee for
the cash value of the accrued compensatory time, plus an
additional equal amount as liquidated damages, reduced by the
amount of compensatory time already used by the employee.
Finally, H.R. 1406 contains a sunset provision whereby the
legislation would cease to exist five years after the date of
its enactment. This will allow Congress to review the use of
compensatory time by private-sector employers and employees
and, if need be, to make adjustments in the legislation
authorizing its use.
Committee Views
BACKGROUND
The FLSA was enacted in 1938.\2\ Among its provisions is
the requirement that hours of work by ``non-exempt employees''
beyond 40 hours in a seven-day period must be compensated at a
rate of one and one-half times the employee's regular rate of
pay.\3\ Certain exceptions to the ``40-hour workweek'' are
permitted, under Sections 7 and 13 of the FLSA,\4\ for a
variety of specific types and places of employment whose
circumstances have led Congress, over the years, to enact
specific provisions regarding maximum hours of work for those
types of employment. In addition, the ``overtime pay''
requirement does not apply to employees who are exempt as
``executive, administrative, or professional'' employees.\5\
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\2\29 U.S.C. Sec. Sec. 201-219.
\3\29 U.S.C. Sec. 207.
\4\29 U.S.C. Sec. Sec. 207, 213.
\5\29 U.S.C. Sec. 213.
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Under the FLSA's overtime requirements, overtime pay for
employees in the private-sector must be in the form of cash
wages paid to the employee in his or her next paycheck. This is
different than overtime requirements for employees in the
public-sector. Section 7(o) of the FLSA, added to the law in
1985, provides that state and local government employers may
offer compensatory time at a rate not less than one and one-
half hours for each hour of employment for which overtime
compensation is required, subject to regulatory requirements
administered by the Department of Labor.\6\ While federal
government employees may also earn compensatory time in lieu of
overtime pay, their use of compensatory time is governed by the
Federal Employees Flexible and Compressed Work Schedules Act of
1978 and subject to regulatory requirements administered by the
Office of Personnel Management.\7\
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\6\29 U.S.C. Sec. 207(o); 29 C.F.R. Sec. Sec. 553.20-553.28.
\7\See 5 U.S.C. 5543, 6123; 5 C.F.R. 550.114, 551.531. Of
particular note, federal government employees may generally earn one
hour of compensatory time for each hour of overtime worked. See id.
5543.
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This difference in treatment between the private- and
public-sectors occurs because the public-sector compensatory
time provisions were added nearly 50 years after the FLSA was
originally written. As a result, the public-sector compensatory
time provisions recognized the workplace and workforce had
changed greatly since 1938. Specifically, in adding Section
7(o) to the FLSA in 1985, Congress recognized that changes in
the workplace and workforce led many state and local
governments and their employees, prior to their being covered
by the FLSA,\8\ to mutually agree upon forms of compensatory
time. As the Senate Labor Committee explained regarding the
inclusion of compensatory time for state and local governments
in the 1985 amendments to the FLSA:
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\8\In Garcia v. San Antonio Metro. Transit Auth., 469 U.S. 528
(1985), the Supreme Court held that state and local government
employees were covered by the FLSA.
The Committee also is cognizant that many state and local
government employers and their employees voluntarily have
worked out arrangements providing for compensatory time off in
lieu of pay for hours worked beyond the normally scheduled
workweek. These arrangements--frequently the result of
collective bargaining--reflect mutually satisfactory solutions
that are both fiscally and socially responsible. To the extent
practicable, we wish to accommodate such arrangements.\9\
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\9\Report on S. 1570, Committee on Labor and Human Resources, U.S.
Senate, 99th Congress, First Session, Senate Report No. 99-159 at 8.
The committee is certain that compensatory time can provide
``mutually satisfactory solutions'' in the private-sector as
well. Since the 104th Congress, the committee has heard
compelling testimony from employees in the private-sector
covered by the overtime protections of the FLSA who believe a
change in the law to allow compensatory time would be
beneficial.
Ms. Arlyce Robinson, an Administrative Support Coordinator
for Computer Services Corporation and an hourly non-exempt
employee, described to the Subcommittee on Workforce
Protections how she would like to be able to use compensatory
time:
I am here this morning to share with you my feelings about
the impact of a law that was created over 50 years ago to
protect many of us in the workplace, the Fair Labor Standards
Act. I know that under this law, as a non-exempt employee I am
eligible for overtime if I work more than 40 hours in a work
week. And, while I never turned down an opportunity to earn
more money, there have been times when I would have gladly
given up the additional pay to enjoy flexibility in planning my
work schedule, the same flexibility that my exempt colleagues
have had for some time. Let me give you an example.
In a few months, as all of you know, the weather around
Washington, DC will become much colder. We are likely to see
some snow and ice. And if we have a winter like the one we had
two years ago, we will likely see a great deal of snow and ice.
If it snows on a Monday or Tuesday--at the beginning of my
workweek--and I can't get to work on one of those days, I know
that I can make up the hours that I missed by working extra
hours later in that same week--say on Thursday or Friday.
However, if it snows at the end of my workweek, we have a
different issue. Although my company would like to allow me to
make up the work during the following workweek, the fact is
that they can't allow it without incurring additional costs.
You see, if I only worked 4 eight hour days--or 32 hours--the
first week, I would have to work 48 hours the following week in
order to have a full 80 hour paycheck for the two week period.
But right now under the Fair Labor Standards Act, each one of
the 8 hours worked over 40 in the second week would have to be
paid on an overtime basis. That's just too expensive for my
company, given the number of non-exempt employees that we have.
So since I can't make up the time in the second week, I have to
take vacation leave which keeps my paycheck whole but gives me
less vacation to use later--when I would like to use it. My
only other alternative is to take leave without pay, which
keeps my vacation intact, but results in my losing money in my
paycheck. And I do need my paycheck!!
. . . For the first 20 years of my career, I worked in the
public-sector as a secretary and as an administrative assistant
in the DC public school system and for the DC Office of
Personnel. When I worked for these agencies, I was able to earn
and use compensatory time. I can't earn that now . . . This
lack of flexibility is especially difficult for parents of
young children, both mothers and fathers, and, particularly,
for single parents. Doctor appointments and school conferences
can often only be scheduled during work hours. For non-exempt
employees, this often means having to take sick leave or
vacation leave to have a few hours off to take care of family
responsibilities.\10\
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\10\Hearings on the Fair Labor Standards Act before the
Subcommittee on Workforce Protections, Committee on Economic and
Educational Opportunities, U.S. House of Representatives, 104th
Congress, First Session, Serial No. 104-46 at 180-81.
Ms. Sandie Moneypenny, a process technician for Timken
Company and an hourly non-exempt employee, described how having
the option of choosing compensatory time could help her as a
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working mother:
Compensatory time off for a working mother like myself
would be very helpful. If I had to leave work because of a sick
child, wanted to attend a teachers conference, needed to take
my child to the dentist or just wanted time off to be with my
family, I would have the option without it affecting my pay.
Today I can only use compensatory time in the week it
occurs, but as most of you know, life doesn't seem to work that
way. If I could bank my overtime, I wouldn't have to worry
about missing work if my child gets sick on Monday or Tuesday.
I also would only be postponing valuable time off with my
family when I have a busy work week, because I could always
take the time off at a later date.\11\
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\11\Id. at 186.
Ms. Deborah McKay, an Administrative Specialist, with PRC,
Inc. explained why she would like to have the option of
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selecting compensatory time off in lieu of cash overtime:
Under this proposal, an employee would be given the option
to use overtime compensatory time at a later date when these
family emergency type situations occur. Personally, I would
find this time useful in working on term papers and projects
for school as well as waiting for the repairman. There is
nothing more frustrating than having to take a whole day of
leave to have a scheduled repairman show up--supposed to show
up at 9 a.m. and then not show up until 3 or 4 in the afternoon
. . .
. . . [W]hat I am recommending is simple . . . [H]ave the
FLSA amended by giving non-exempt and exempt employees the
option of time and a half pay or time and a half of equal value
off.\12\
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\12\Id. at 416-17.
Mr. Peter Faust of Clear Lake, Iowa, an hourly employee at
a nonprofit facility for individuals who are mentally and/or
physically disabled, described the difficulty he and his wife
have when struggling to balance family responsibilities with
work schedules and explained how additional time off would
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benefit him and his coworkers:
This amendment is a win-win for working families and
employers. . . . Everyone I've talked to, without exception,
would like the choice of getting overtime or comp time, and
almost everyone I've asked preferred comp time rather than
overtime. . . .
There are a lot of ways to make money in this country and
lots of ways to spend it, but there's only one way to spend
time with yourself, family or friends, and that's to have the
time to spend.
In this country of choice, can the working families have a
choice? Some already do. Federal employees have had the choice
to save comp time since 1978. State and local employees can
save it too. Does our government value the private working
families in this country enough to give us the same choice?\13\
---------------------------------------------------------------------------
\13\Hearing on H.R. 1, Working Families Flexibility Act, before the
Subcommittee on Workforce Protections, Committee on Education and the
Workforce, U.S. House of Representatives, 105th Congress, First
Session, Serial No. 105-1 at 17-18.
Ms. Linda M. Smith, a medical staff credentialing
coordinator and secretary at the Bascom Palmer Eye Institute in
Miami, Florida, expressed ``wholehearted support'' for the
development of a program that would allow the option of
---------------------------------------------------------------------------
compensatory time:
With the implementation of the banked comp time program, I
could use my overtime hours to create time for pregnancy leave
for a second child, furthering my education, taking care of a
debilitated parent, or, closest to my heart, creating special
days with my daughter. A goal of mine is to obtain my degree.
My employer allows me to take one class during working hours,
without pay. With accrued comp time, I could take the class
during working hours, with pay. Accrued comp time would also
allow me to take time off for doctors' appointments, teachers
conferences, or to care for a sick child without having to use
accrued sick time. In this way, sick time could be saved for
catastrophic or long-term illnesses.\14\
---------------------------------------------------------------------------
\14\Id. at 22.
Ms. Christine Korzendorfer, an hourly employee with TRW in
Manassas, Virginia, told the subcommittee how important it
would be to have the choice between compensatory time and
---------------------------------------------------------------------------
overtime wages:
This schedule as an hourly employee provides me with a lot
of overtime pay. This pay is important to me. However, the time
with my family is more important. If I had a choice there are
times when I would prefer to take comp time in lieu of
overtime. What makes this idea appealing is that I would have a
choice with the legislation you are considering.
Just recently, my son was ill and I had to stay at home
with him. I took a day of vacation which I would have preferred
to use for vacation! But I did not want to take unpaid leave. .
. . If I had the choice, I would have used comp time in lieu of
overtime for that day off from work. Besides, I would have only
had to use about five and one-half hours of comp time to cover
that eight hour day.\15\
---------------------------------------------------------------------------
\15\Id. at 10-11.
Ms. Terri Martell, an electrician with the Eastman Kodak
Company in New York, told the subcommittee about the increased
flexibility that compensatory time would provide to her and her
---------------------------------------------------------------------------
co-workers:
Another example of needing flexibility with overtime pay
and how it is paid is when the children are sick. I remember
when my 10-year old Eric was born, I used up eleven of my
twenty vacation days to stay home with him or take him to the
doctor just that first year. Being a first time mom and needing
to nurture him while he was sick was very important to him and
to me. As a working mother, it is very stressful to be at work
when your children are in someone else's care. In 1993, I could
have used that [comp] time during those emergencies.
I have heard from co-workers who feel strongly about the
need for the more flexible schedules--the kind that comp time
would allow. These are employees who are caregivers of their
aging parents. One colleague in particular told me of her need
to balance work and family. For her, comp time would mean
allowing more flexibility in spending more time with her ill
parent. The ability to save overtime as comp time and use it in
times of need is crucial when crisis occurs but also to cope
with day-to-day challenges. Also, someone who has used up
annual vacation hours may have a need for extra time later in
the year. Banking comp time could offer options instead of
requiring employees to choose between working and taking time
off without pay to address family needs.\16\
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\16\Hearing on H.R. 1119, Family Time Flexibility Act, before the
Subcommittee on Workforce Protections, Committee on Education and the
Workforce, U.S. House of Representatives, 108th Congress, First
Session, Serial No. 108-7 at 50.
Ironically, employees classified as exempt under the FLSA
are not so restricted by law and often are permitted by their
employers to have more flexibility in their schedules than non-
exempt employees. But, the law has denied non-exempt employees
---------------------------------------------------------------------------
this much-needed flexibility. As Ms. Robinson summarized:
While the law was intended to protect us--and maybe 50
years ago it did--in today's business world it has had the
effect of creating the illusion of two classes of workers. The
term non-exempt is often misinterpreted to mean ``less than
professional.''\17\
---------------------------------------------------------------------------
\17\Hearings on the Fair Labor Standards Act before the
Subcommittee on Workforce Protections, Committee on Economic and
Educational Opportunities, U.S. House of Representatives, 104th
Congress, First Session, Serial No. 104-46 at 181.
Recently, Ms. Karen DeLoach, a bookkeeper from Montgomery,
Alabama, shared her personal insight into the importance of
allowing employees to choose between compensatory time and cash
---------------------------------------------------------------------------
wages:
You may wonder why compensatory time could matter to an
empty-nester who seems to be in pretty good health. Why would I
need more time off from work than the paid sick and vacation
time that my employer agreed to allow annually? Well, I've
learned in the last several years that there can still be many
unforeseen needs in addition to any planned break from the
routine.
In the last three years, my mother, my brother, my father-
in-law and one of my sons-in-law have all passed away, some at
relatively early ages. I am not getting any younger, and
neither is the rest of the world so yes, I say again, time is
precious to me. I would greatly appreciate the option at work
to choose between being compensated in dollars or days.\18\
---------------------------------------------------------------------------
\18\Hearing on H.R. 1406, Working Families Flexibility Act of 2013,
before the Subcommittee on Workforce Protections, Committee on
Education and the Workforce, U.S. House of Representatives, 113th
Congress, First Session, April 11, 2013 (to be published) (emphasis in
original).
There is ample support for concluding that Ms. Robinson,
Ms. Moneypenny, Ms. McKay, Mr. Faust, Ms. Smith, Ms.
Korzendorfer, Ms. Martell, and Ms. DeLoach are not alone in
their desire for the increased flexibility that would be
provided by the Working Families Flexibility Act of 2013. As
Ms. Juanita Phillips, Director of Human Resources at Intuitive
Research and Technology Corporation in Huntsville, Alabama,
---------------------------------------------------------------------------
testified before the subcommittee:
The increased diversity and complexity within the American
workforce--combined with global competition in a 24/7 economy--
is driving the need for more workplace flexibility. C-suite
executives, for example, say the biggest threat to their
organizations' success is attracting and retaining top talent.
Human resource professionals believe the best way to attract
and retain the best people is to provide workplace flexibility.
Moreover, a large majority of employees--87 percent--report
that flexibility in their jobs would be ``extremely'' or
``very'' important in deciding whether to take a new job.\19\
---------------------------------------------------------------------------
\19\Hearing on H.R. 1406, Working Families Flexibility Act of 2013,
before the Subcommittee on Workforce Protections, Committee on
Education and the Workforce, U.S. House of Representatives, 113th
Congress, First Session, April 11, 2013 (to be published).
---------------------------------------------------------------------------
As Ms. DeLoach put it most simply to the subcommittee:
Right now, committee members, you have the ability to
empower families across the nation with the freedom of choice.
You could afford me the freedom to choose to use my overtime as
leave time, while my coworker can still choose overtime pay, if
she likes.\20\
---------------------------------------------------------------------------
\20\Id.
---------------------------------------------------------------------------
H.R. 1406, WORKING FAMILIES FLEXIBILITY ACT OF 2013
H.R. 1406 amends the FLSA to permit employers in the
private-sector to offer employees the voluntary option to
receive overtime pay in the form of compensatory time off in
lieu of cash wages. The legislation does not change the
employer's obligation to pay overtime at the rate of one and
one-half times the employee's regular rate of pay for any hours
worked over 40 in a seven-day period. The bill simply allows
overtime compensation to be given in the form of paid time off,
at the rate of one and one-half hours of compensatory time for
each hour of overtime worked, and only if the employee and
employer agree on that form of overtime compensation. As is
already the case when compensatory time is used in the public-
sector, the employee would be paid at his or her regular hourly
rate of pay when the compensatory time is used.
H.R. 1406 would not alter current use of compensatory time
in the public-sector. Rather, the legislation seeks to extend
the option of compensatory time in lieu of overtime
compensation to private-sector employees (the same option
federal, state, and local government employees have had for
many years), which private-sector employees overwhelmingly
support. The legislation includes numerous protections to
ensure employees' choice and use of compensatory time are truly
voluntary. Compensatory time, as provided in H.R. 1406, is not
a mandate on employers or employees. H.R. 1406 simply gives
private-sector employees and employers the opportunity to agree
to this arrangement, an opportunity currently unavailable under
the FLSA.
COMPENSATORY TIME AGREEMENT
Under H.R. 1406, an employer and his or her employee must
reach an express mutual agreement that overtime compensation
will be in the form of compensatory time. If either the
employee or the employer does not so agree, then the overtime
compensation must be in the form of cash wages.
The agreement between the employer and employee must be
reached prior to the performance of the work for which the
compensatory time would be given. The agreement may be specific
as to each hour of overtime, or it may be a blanket agreement
covering overtime worked within a set period of time.
The bill allows two types of employer-employee agreements
on compensatory time. Where the employee is represented by a
recognized or certified labor organization, the agreement must
be in the collective bargaining agreement between the employer
and the recognized or certified labor organization. By
referring to a labor organization that has been recognized or
certified under applicable law, H.R. 1406 includes any law
providing for recognition or certification of labor
organizations representing private-sector workers in collective
bargaining, including, at the federal level, the National Labor
Relations Act and the Railway Labor Act.
Where an employee is not represented by a recognized or
certified labor organization, the agreement must be made
between the employer and the individual employee. The bill
specifies any such agreement between the employer and an
individual employee must be entered into knowingly and
voluntarily by the employee, and may not be a condition of
employment.
The bill also requires the agreement on compensatory time
between the employer and the individual employee be affirmed in
a written or otherwise verifiable statement. The latter is
intended to allow computerized and other similar payroll
systems to include this information, so long as the employee's
agreement to take the overtime in the form of compensatory time
is verifiable. The committee does not intend that the agreement
could be purely oral with no contemporaneous record kept. To
further ensure compensatory time agreements are authentic, H.R.
1406 provides, pursuant to the general recordkeeping authority
of the FLSA, the Secretary of Labor has authority to prescribe
the information that the records of such agreements must
include and the period of time the records should be maintained
by the employer.\21\
---------------------------------------------------------------------------
\21\29 U.S.C. Sec. 211(c).
---------------------------------------------------------------------------
An individual employee's voluntary agreement to choose
compensatory time in lieu of cash overtime pay is further
protected by provisions in the bill allowing an employee to
withdraw from such an agreement at anytime. Thus, an employee
who agrees all or a portion of the overtime hours he or she
works will be compensated in this form may at any point
withdraw from that arrangement, in which case any subsequent
hours of overtime worked by the employee must be compensated in
the form of cash wages.
As is the case with public-sector compensatory time, H.R.
1406 does not require the same agreement be entered with every
employee, or that the employer agree to offer compensatory time
to all employees.\22\ Opponents of compensatory time have
claimed this allows an employer to unfairly single out
employees and force them to take compensatory time in lieu of
cash wages against the employee's wishes. However, the bill's
express prohibition on ``direct or indirect coercion'' and
attempted coercion of employees (see discussion below), would
prohibit an employer from conferring any benefit or
compensation for the purpose of interfering with an employee's
right to request or not request compensatory time. Thus, an
employer may not single out employees for overtime work for the
purpose of rewarding or punishing employees for their
willingness or unwillingness to take compensatory time.\23\
---------------------------------------------------------------------------
\22\29 C.F.R. Sec. 553.23(c) (``An employer need not adopt the same
agreement or understanding with different employees and need not
provide compensatory time to all employees.'').
\23\Obviously an employer also may not use any overtime policy,
including compensatory time, to discriminate among employees for any
reason prohibited by law. See Testimony of Mr. Robert Weisman, Hearing
on H.R. 1, Working Families Flexibility Act, before the Subcommittee on
Workforce Protections, Committee on Education and the Workforce, U.S.
House of Representatives, 105th Congress, First Session, Serial No.
105-1.
---------------------------------------------------------------------------
The opponents of compensatory time have argued it should be
denied to employees in the private-sector, but if compensatory
time must be allowed, then ``low-wage'' workers and certain
occupations (e.g., temporary, seasonal, or part-time
occupations) should be excluded. The committee believes many
workers who likely would be included in a national definition
of ``low-wage'' want the option of compensatory time--and feel
perfectly capable of making that decision themselves. Indeed,
some of the most forceful and compelling testimony before the
Subcommittee on Workforce Protections in support of allowing
workers the option of compensatory time was given by a ``low-
wage worker,'' Mr. Peter Faust, who likely would be denied that
option if all such workers were excluded from H.R. 1406.\24\
Further, the requirement for mutual agreement by the employer
and the employee and the employee protections in the bill
ensure compensatory time is voluntary. The committee sees no
reason to deny certain employees the option of compensatory
time, based solely upon their level of income or their
occupation.
---------------------------------------------------------------------------
\24\See Testimony of Mr. Peter Faust, Hearing on H.R. 1, the
Working Families Flexibility Act, before the Subcommittee on Workforce
Protections, Committee on Education and the Workforce, U.S. House of
Representatives, 105th Congress, First Session, Serial No. 105-1.
---------------------------------------------------------------------------
CONDITIONS ON COMPENSATORY TIME
The committee intends that compensatory time to be a matter
of agreement between employers and employees. To that end, the
law should permit employers and employees some flexibility in
structuring compensatory time arrangements. H.R. 1406 provides
certain parameters for such compensatory time arrangements,
primarily to ensure employees are fully protected. These
parameters apply whether the compensatory time agreement is
with a labor organization or with an individual employee (see
discussion above). The agreement between the employer and
employee may include other provisions governing the
preservation, use, or cashing out of compensatory time, so long
as these provisions are consistent with H.R. 1406. To the
extent any provision of an agreement is in violation of H.R.
1406, the provision would be superseded by the requirements of
the FLSA.\25\
---------------------------------------------------------------------------
\25\This relationship between the agreement and the parameters
stated in law is the same as applies to public-sector compensatory
time. See 29 C.F.R. Sec. 553.23(a)(2).
---------------------------------------------------------------------------
Employee eligibility requirements
To be eligible to choose compensatory time, an employee
must have worked at least 1,000 hours in a period of continuous
employment with his or her employer during the 12-month period
preceding the date the employee agrees to receive or receives
compensatory time. Under the language of the bill, this 1,000
hour requirement is assessed on a ``rolling'' basis, such that
to be eligible to enter an agreement to receive compensatory
time, or to actually receive compensatory time in lieu of cash
compensation for overtime, such employee must have worked at
least 1,000 hours in a period of continuous employment with the
employer in the 12-month period prior to either entering such
an agreement or actually receiving compensatory time.
The committee expects the phrase ``period of continuous
employment with the employer'' will be construed to encompass
an unbroken period of time in which an employee is maintained
on the payroll of a single employer (or, as applicable, its
successor) on active status, or on inactive status where the
employer has a reasonable expectation that the employee will
return to duty (e.g., an employee on paid or unpaid leave whom
the employer reasonably expects will return to duty will
generally be considered to be in a ``period of continuous
employment'' with the employer).
Compensatory time accrual limit
H.R. 1406 provides an employee may accrue no more than 160
hours of compensatory time. This is in contrast to the public-
sector provisions in current law that allow most employees to
accrue 240 hours of compensatory time (in some occupations,
employees may accrue up to 480 hours). The lower limit for
private-sector employees is designed to protect both employers
and employees against accrual of excessive amounts of
compensatory time liability.
The committee emphasizes this 160-hour limit is the legal
maximum that may be accrued. Employers and employees may
establish a lower limit for compensatory time accrual, and
employees, of course, may decline compensatory time as payment
for overtime altogether.
Monetary compensation for unused compensatory time
The bill requires an annual ``cash out'' of all accrued
compensatory time. Such annual cash out protects both employers
and employees against accrual of excessive amounts of
compensatory time liability. Unless an alternative date is
established by the employer, the annual cash out date is the
end of the calendar year (December 31) and the employee must be
paid for the accrued compensatory time not later than the
following January 31. The employer may establish an alternative
annual cash out date, in which case the employer must pay the
employee for any accrued and unused compensatory time within 31
days of the end of the 12-month period. Subject to continued
agreement between the employer and employee, the employee may
begin to accrue compensatory time anew after the cash out date.
An employer may cash out some accrued compensatory time
more frequently than annually. However, the employer must
provide an employee with 30 days' notice prior to cashing out
the employee's accrued, unused compensatory time, and may only
cash out accrued compensatory time in excess of 80 hours.
An employee may also choose to cash out his or her accrued
compensatory time at any time. The employee may submit a
written request to such effect to the employer, upon which
request the employer must cash out the employee's accrued
compensatory time within 30 days of receiving the request.
There is no hour limit on an employee's ability to cash out
accrued compensatory time.
As described above, an employee who has an individual
agreement with his or her employer regarding compensatory time
may withdraw that agreement at any time. Similarly, an employer
who offers compensatory time to employees may discontinue such
policy upon giving employees 30 days' notice, except where a
collective bargaining agreement provides otherwise. In the
event an employer does discontinue offering compensatory time,
any hours of compensatory time already accrued by employees
remain the employees' hours and must be so recognized by the
employer.
Upon the voluntary or involuntary termination of
employment, the bill provides an employee's unused compensatory
time must be cashed out by the employer, and is to be treated
as a wage payment due and owed to the employee. The bill
further provides any payment owed to an employee or former
employee (whether because of the annual cash out of all accrued
compensatory time, the employee's request to cash out accrued
compensatory time, the employer's decision to cash out certain
accrued compensatory time as described above, or the voluntary
or involuntary termination of employment) shall be considered
unpaid overtime compensation owed to the employee. In addition
to making explicit that the remedies for unpaid overtime
compensation under the FLSA apply, this provision also assures
any unpaid, accrued compensatory time is treated as unpaid
employee wages in the event of the employer's bankruptcy. Thus,
any unpaid, accrued compensatory time would have the same
priority claim and legal status as other employee wages under
both the FLSA and the Bankruptcy Code. As described above, the
payment for accrued compensatory time is owed to the employee
or former employee when the claim for payment is made, and
takes the same priority as other wages as of that date.
In all cases of cashed out accrued compensatory time, the
rate of cash out must be the employee's regular rate when the
compensatory time was earned or the employee's final regular
rate, whichever is higher. For example, if compensatory time is
accrued during the course of a year and the employee has
received an increase in his or her hourly rate during the year
after the compensatory time is accrued, the cash out rate at
the end of the year would be the employee's final regular rate
of pay for that year, reflecting the employee's increase in
pay, even if the compensatory time was accrued prior to the pay
increase.
NOTICE TO EMPLOYEES
H.R. 1406 requires the Secretary of Labor to revise the
posting requirements under the regulations of the FLSA to
reflect the compensatory time provisions of the bill. This will
help ensure employees are informed of the circumstances under
which compensatory time may be offered by an employer, as well
as the employees' right to accept or decline such offer, and
the employees' rights regarding the use of compensatory time.
The Secretary of Labor may also promulgate such regulations as
necessary in order to implement the provisions of H.R. 1406.
COMPENSATORY TIME AND EMPLOYMENT BENEFITS
Opponents of H.R. 1406 have raised concerns that
compensatory time would reduce an employee's pension benefits.
These concerns are unfounded. The overtime hours for which an
employee receives compensatory time are hours for which the
employee is paid or entitled to pay for the performance of
duties for the employer. Therefore, they would fall within the
definition of ``hours of service'' under the Employee
Retirement Income Security Act, for which the employee would be
credited for purposes of accrual, participation, and vesting of
benefits.\26\
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\26\29 C.F.R. Sec. 2530.200b-2.
---------------------------------------------------------------------------
Obviously, in some cases the employee has also not worked
hours that he or she otherwise would have when the employee
uses (as compared to accrues) compensatory time off. Thus, the
employee's total hours worked may be reduced, not by the
earning of compensatory time, but by substituting the
compensatory time for other hours of work. If, as a result, the
employee works fewer total hours, the employee's total monetary
earnings and credits for benefits may be less. But that effect
is no different than any other decision by the employee (for
example, refusing optional overtime work) that reduces the
total number of hours actually worked by the employee. Of
course, employees who choose to take compensatory time off have
elected to receive a benefit that enables them to spend more
time with their family or for whatever purpose they wish, which
is not available to employees who elected to receive cash
wages.
Similarly, opponents are concerned that compensatory time
could limit an employee's eligibility for unemployment
benefits, or the amount of unemployment benefits to which the
employee would be entitled. H.R. 1406 clearly treats
compensatory time as employee wages and any payments for
accrued compensatory time would be treated the same as other
employee wages under state laws for purposes of eligibility for
unemployment benefits and determination of the amount of
benefits. Receipt of compensation for accrued compensatory time
when an employee's employment is terminated may, depending on
state law on ``disqualifying income,'' defer receipt of
unemployment benefits, but would not diminish the total
benefits to which the employee may be entitled. However, to
suggest, as some have, compensatory time payments should not be
considered as wages in any unemployment benefit determination
would turn existing federal policy on ``disqualifying income''
on its head by dictating to states how to treat this form of
employee wages.
EMPLOYEE USE OF ACCRUED COMPENSATORY TIME
Under H.R. 1406, an employee who has accrued compensatory
time may generally use the time whenever he or she so desires.
However, the legislation does require an employee to provide
his or her employer with a reasonable amount of notice prior to
using compensatory time, and the employer in permitted under
H.R. 1406 to deny the employee's request if the use of time off
would ``unduly disrupt'' the operations of the business. It is
the committee's intent that an employer shall grant the
employee's request to use accrued compensatory time off on the
date and/or time requested by the employee if the use on such
date and/or time does not ``unduly disrupt'' the employer's
operations, and if the employee has requested use of the
accrued compensatory time within a reasonable period in advance
of the date and/or time requested.
These conditions on the use of accrued compensatory time
are the same as those in current law for the public-sector
under Section 7(o) of the FLSA.\27\ Regulations issued by the
Department of Labor under Section 7(o) define ``unduly
disrupt'' as follows:
---------------------------------------------------------------------------
\27\29 U.S.C. Sec. 207(o)(5).
When an employer receives a request for compensatory time
off, it shall be honored unless to do so would be ``unduly
disruptive'' to the agency's operations. Mere inconvenience to
the employer is an insufficient basis for denial of a request
for compensatory time off. For an agency to turn down a request
from an employee for compensatory time off requires that it
should reasonably and in good faith anticipate that it would
impose an unreasonable burden on the agency's ability to
provide services of acceptable quality and quantity for the
public during the time requested without the use of the
employee's services.\28\
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\28\29 C.F.R. Sec. 553.25(d); see also Department of Labor, Wage
and Hour Opinion Letter, 1994 DOLWH LEXIS 71 (Aug. 19, 1994) (``It is
our position, notwithstanding [a collective bargaining agreement to the
contrary], that an agency may not turn down a request from an employee
for compensatory time off unless it would impose an unreasonable burden
on the agency's ability to provide service of acceptable quality and
quantity for the public during the time requested without the use of
the employee's service. The fact that overtime may be required of one
employee to permit another employee to use compensatory time off would
not be a sufficient reason for an employer to claim that the
compensatory time off request is unduly disruptive.'').
Court decisions regarding public-sector compensatory time
have also shown the ``unduly disrupt'' standard is narrow and
does not allow an employer to control an employee's use of
compensatory time off. In Heitmann v. City of Chicago, the
Seventh Circuit Court of Appeals found Section 7(o) of the FLSA
and the Department of Labor's corresponding regulations require
an employer to grant compensatory time off on the date and time
requested by an employee, unless doing so would cause undue
disruption.\29\ The court noted that requiring an employer to
honor an employee's specific request for compensatory time off,
absent undue disruption of the employer's operations,
appropriately ``makes compensatory leave more attractive to
workers and hence a more adequate substitute for money, the
Fair Labor Standards Act's principal response to overtime
work.''\30\
---------------------------------------------------------------------------
\29\560 F.3d 642, 646 (7th Cir. 2009). But see Mortensen v. County
of Sacramento, 368 F.3d 298 (9th Cir. 2004) (finding that the public-
sector compensatory time provisions require only that an employee be
allowed to use compensatory time off within a ``reasonable period'' of
the date requested for such leave, unless doing so would ``unduly
disrupt'' the agency's operations); Houston Policy Officers Union v.
City of Houston, 330 F.3d 298 (5th Cir. 2003) (same).
\30\Heitmann, 560 F.3d at 647.
---------------------------------------------------------------------------
Similarly, in Beck v. City of Cleveland, the Sixth Circuit
Court of Appeals found ``to grant the City the unlimited
discretion to deny compensatory leave requests relieves the
City of establishing the undue disruption requirement imposed
by Congress.''\31\ As a result, the court held that the
plaintiffs-police officers' ``compensatory leave requests must
be granted absent `clear and affirmative evidence' of an undue
disruption of the City's provision of police services for its
citizens.''\32\
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\31\390 F.3d 912, 925 (6th Cir. 2005).
\32\Id. at Sec. 926; see also DeBraska v. City of Milwaukee, 131 F.
Supp. 2d 1032 (E.D. Wis. 2000) (deferring to the Department of Labor's
interpretation of its regulations as requiring that an employee's
specific compensatory time off requested must be granted absent undue
disruption of the employer's operations).
---------------------------------------------------------------------------
The committee also notes the ``unduly disrupt'' standard
included in H.R. 1406 is similar to the standard in the Family
and Medical Leave Act (FMLA) limiting an employee's right to
take leave for medical treatments for the employee or a member
of his or her family (``. . . the employee shall make a
reasonable effort to schedule the treatment so as not to
disrupt unduly the operations of the employer . . .'').\33\
---------------------------------------------------------------------------
\33\29 U.S.C. Sec. 2612(e). As one district court said in
construing these provisions of the FMLA, ``The FMLA also does not give
employees the unfettered right to take time off subject only to their
own convenience without any consideration of its effect upon the
employer.'' Kaylor v. Fannin Regional Hospital, 946 F.Supp. 988, 999
(N.D. Ga. 1996).
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Given the long history of this language in the FLSA with
regard to compensatory time in the public-sector and the
inclusion of similar language in the FMLA, it is simply
dishonest for opponents of private-sector use of compensatory
time to claim H.R. 1406 allows the employer to control when
compensatory time is used. The employer's right to deny
compensatory time under H.R. 1406 is very limited. But the
employer must have some ability to maintain the operations of
the business. If that ability is not reflected in the law, then
no employer will offer compensatory time as an option for
employees, and the committee's efforts to respond to employees'
desires for flexibility will be in vain. Furthermore, providing
for an employee's use of compensatory time without any regard
to workload or business demands is simply unfair to the
employee's coworkers, who in many cases would have to handle
the workload of the absent employee. Just as in 1985 when
public-sector workers were permitted to use compensatory time
in lieu of overtime pay, H.R. 1406 seeks ``to balance the
employee's right to make use of comp time that has been earned
and the employer's need for flexibility in operations.''\34\
---------------------------------------------------------------------------
\34\Report on S. 1570, Committee on Labor and Human Resources, U.S.
Senate, 99th Congress, First Session, Senate Report No. 99-159 at 11.
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ENFORCEMENT AND REMEDIES
As an amendment to the FLSA, the compensatory time
provisions in H.R. 1406 would be subject to the applicable
enforcement and remedies of the FLSA. Currently under the FLSA,
Section 15(a)(2) makes it unlawful for any person to violate
any provision of Section 7, of which the compensatory time
provisions of H.R. 1406 would be a part.\35\ In addition,
Section 15(a)(3) makes it unlawful to ``discharge or in any
other manner discriminate against any employee because such
employee has filed any complaint or instituted or caused to be
instituted any proceeding under or related to'' the employee's
rights under the FLSA.\36\
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\35\29 U.S.C. Sec. 215(a)(2).
\36\Id. Sec. 215(a)(3).
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Section 16(b) of the FLSA authorizes an action by an
employee against his or her employer for any violations of
Section 7.\37\ The suit may be filed in any federal or state
court. An employee may also file a complaint with the
Department of Labor. The Department of Labor generally attempts
to resolve such complaints; however, the department may also
sue the employer for damages on behalf of the employee or
employees whose rights were violated, or may also seek
injunctive relief.\38\ Section 16(e) also authorizes the
Secretary of Labor to seek civil penalties of up to $1,100 per
violation against an employer who ``willfully or repeatedly''
violates Section 7.\39\ In any action in which the employee has
been wrongfully denied overtime compensation, the FLSA
authorizes damages equal to the amount of the unpaid
compensation required by the FLSA and an equal amount as
liquidated damages;\40\ liquidated damages may be reduced or
eliminated if the court finds that the employer acted in good
faith and had reasonable grounds for believing he or she was in
compliance with the FLSA.\41\ In any action brought by an
employee, the employee may also be paid for his or her
attorneys' fees and costs.\42\
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\37\Id. 216(b).
\38\Id. Sec. 217.
\39\Id. Sec. 216(e).
\40\Id. Sec. 216(b).
\41\Id. Sec. 260.
\42\Id. Sec. 216(b).
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To be clear, H.R. 1406 retains all of the enforcement
mechanisms and remedies that currently exist under the FLSA.
H.R. 1406 also includes a provision prohibiting an employer
from directly or indirectly intimidating, threatening,
coercing, or attempting to intimidate, threaten, or coerce any
employee for purposes of interfering with the employee's right
to take or not take compensatory time in lieu of cash overtime,
or to use accrued compensatory time. Curiously, opponents of
compensatory time have claimed H.R. 1406 would allow employers
to force employees to take compensatory time against their will
or to use accrued compensatory time at the employer's
convenience. Those claims contradict the direct language of the
bill.
The language of H.R. 1406 prohibiting intimidation,
threats, and coercion, or attempts thereto, is identical to
prohibitory language applicable to federal employees under the
FMLA\43\ and the Federal Employees Flexible and Compressed Work
Schedules Act.\44\ The term ``intimidate, threaten, or coerce''
has been defined under those laws as ``promising to confer or
conferring any benefit (such as appointment, promotion, or
compensation), or taking or threatening to take any reprisal
(such as deprivation of appointment, promotion, or
compensation).''\45\ Thus, H.R. 1406 prohibits an employer, for
example, from forcing employees to take compensatory time in
lieu of monetary compensation by offering overtime hours only
to employees who ask for compensation in the form of
compensatory time.
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\43\5 U.S.C. Sec. 6385.
\44\Id. Sec. 6132.
\45\Id. Sec. 6385.
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The bill also creates a new remedy under the FLSA
applicable to employers who violate the anti-coercion language
just described. Section 3 of H.R. 1406 provides an employer who
violates the anti-coercion provision shall be liable to the
employee for the employee's rate of compensation for each hour
of compensatory time accrued and an equal amount as liquidated
damages. If the employee has already used some or all of the
compensatory time, the amount to be paid as damages is reduced
by that amount.
Opponents of compensatory time have claimed, while it may
be prohibited conduct under H.R. 1406, there is no sanction in
H.R. 1406 for an employer who either forces an employee to take
compensatory time or denies the employee the right to use
accrued compensatory time. In both cases, the opponents are
wrong. An employee who is forced to take compensatory time off
may receive the amount of the employee's compensation for each
hour of compensatory time plus an equal amount of liquidated
damages, less the amount of compensation the employee has
already received for those hours of compensatory time. The
committee expects the department will make use of the
regulatory process to clarify the application of the remedies
provisions contained in H.R. 1406 to these and other potential
scenarios.
In addition, there is a ``self-policing'' aspect: the
employee retains his or her compensation and can demand to cash
out at his or her current rate of pay or the rate when the time
was earned, whichever is higher. In short, the employer does
not benefit by denying the employee the use of his or her
compensatory time, and when necessary, there are effective
sanctions under the bill and the FLSA for employers who violate
the employee protections and other provisions of H.R. 1406.
CONCLUSION
For many Americans, balancing the demands of family and
work can be difficult. Each worker faces a unique set of
challenges and responsibilities, be it caring for an aging
relative, attending a parent-teacher conference, or seeing a
son or daughter deploy overseas. Government employees have long
been able to choose and accrue paid time off as compensation
for working overtime hours, allowing these public-sector
employees greater flexibility to meet family obligations.
However, the federal government prohibits private-sector
workers from enjoying this same benefit. H.R. 1406, the Working
Families Flexibility Act of 2013, would remove this obstacle in
federal law.
Opponents of H.R. 1406 continue to ignore the legislation's
basic principle: worker choice. Under the legislation, workers
choose whether to accept compensatory time; workers choose when
to withdraw from a compensatory time agreement; workers choose
when to cash out accrued compensatory time; and workers choose
when to use their paid time off so long as they follow the same
guidelines as public employees do. The Working Families
Flexibility Act of 2013 is commonsense, pro-worker legislation
that will help Americans better balance the needs of family and
the workplace.
Section-by-Section Analysis
SECTION 1. SHORT TITLE
This Act may be cited as the ``Working Families Flexibility
Act of 2013.''
SECTION 2. COMPENSATORY TIME
In lieu of monetary overtime compensation, an employee may
receive compensatory time off at a rate not less than one and
one-half hours for each hour of overtime worked.
An employer may provide compensatory time to employees only
if such time is in accordance with the applicable provisions of
a collective bargaining agreement between the employer and the
labor organization that has been certified or recognized as the
representative of the employees under applicable law.
In the case of employees who are not represented by a labor
organization certified or recognized as the representative of
such employees under applicable law, there must be an agreement
arrived at between the employer and employee before the
performance of the work and affirmed by a written or otherwise
verifiable record maintained in accordance with Section 11(c)
of the Fair Labor Standards Act in which the employer has
offered and the employee has chosen to receive compensatory
time in lieu of monetary overtime compensation. Such agreement
must be entered into knowingly and voluntarily by such employee
and not as a condition of employment. An employee may not agree
to receive compensatory time unless that employee has worked
1,000 hours in continuous employment with the employer in the
12-month period prior to the date of the agreement or receipt
of compensatory time.
An employee may accrue not more than 160 hours of
compensatory time. No later than January 31 of each calendar
year, the employee's employer shall provide monetary
compensation for any unused compensatory time accrued during
the preceding calendar year and not used prior to December 31
of the preceding year. Monetary compensation must be provided
at the regular rate received when the compensatory time was
earned or at the final regular rate, whichever is higher.
An employer may designate and communicate to the employees
a 12-month period other than the calendar year, in which case
compensation shall be provided not later than 31 days after the
end of the 12-month period.
An employer may provide monetary compensation for an
employee's unused compensatory time in excess of 80 hours at
any time after giving the employee at least 30 days' notice.
The compensation shall be provided at the regular rate received
when the compensatory time was earned or the final regular
rate, whichever is higher.
Except where a collective bargaining agreement provides
otherwise, an employer who has adopted a policy offering
compensatory time to employees may discontinue such policy upon
giving employees 30 days' notice.
An employee may withdraw from an agreement or understanding
to accrue compensatory time at any time. An employee may also
request in writing that monetary compensation be provided, at
any time, for all compensatory time accrued and not yet used.
Within 30 days of receipt of the written request, the employer
shall provide the employee with the monetary compensation at a
rate received when the compensatory time was earned or at the
final regular rate, whichever is higher.
An employer who provides compensatory time to employees
shall not directly or indirectly intimidate, threaten, or
coerce or attempt to intimidate, threaten, or coerce any
employee for the purpose of interfering with such employee's
rights to request or not request compensatory time off in lieu
of payment of monetary overtime compensation for overtime
hours; or requiring any employee to use such compensatory time.
An employee who has accrued compensatory time off shall,
upon the voluntary or involuntary termination of employment, be
paid for such unused compensatory time.
If compensation is to be paid to an employee for accrued
compensatory time off, the compensation will be paid at a rate
not less than the regular rate received by an employee when the
compensatory time was earned or the final regular rate received
by such employee, whichever is higher.
Any payment owed to an employee for unused compensatory
time shall be considered to be unpaid overtime compensation.
An employee who has accrued compensatory time off and has
requested the use of such compensatory time shall be permitted
by the employee's employer to use such time within a reasonable
period after making the request if the use of the compensatory
time does not unduly disrupt the operations of the employer.
For the purposes of this subsection, the term ``employee''
does not include an employee of a public agency.
For the purposes of this subsection, the terms ``overtime
compensation'' and ``compensatory time'' shall have the
meanings given by Section (7)(o)(7) of the Fair Labor Standards
Act.
SECTION 3. REMEDIES
An employer who violates the anti-coercion provisions
(Section 7(r)(4)) of this bill shall be liable to the employee
affected in the amount of the rate of compensation (determined
in accordance with Section 7(r)(6)(A)) for each hour of
compensatory time accrued by the employee and an additional
equal amount as liquidated damages, reduced by the amount of
such rate of compensation for each hour of compensatory time
used by the employee.
SECTION 4. NOTICE TO EMPLOYEES
Not later than 30 days after the date of the enactment of
this Act, the Secretary of Labor shall revise the materials
provided to employers for purposes of a notice explaining the
Fair Labor Standards Act to employees so that the notice
reflects the amendments made by this bill to the Act.
SECTION 5. SUNSET
This Act and all amendments made by this Act shall expire
five years after its enactment.
Explanation of Amendments
The amendments, including the amendment in the nature of a
substitute, are explained in the body of this report.
Application of Law to the Legislative Branch
Section 102(b)(3) of Public Law 104-1 requires a
description of the application of this bill to the legislative
branch. H.R. 1406 provides for compensatory time for employees
in the private-sector.
Unfunded Mandate Statement
Section 423 of the Congressional Budget and Impoundment
Control Act (as amended by Section 101(a)(2) of the Unfunded
Mandates Reform Act, P.L. 104-4) requires a statement of
whether the provisions of the reported bill include unfunded
mandates. This issue is addressed in the CBO letter.
Earmark Statement
H.R. 1406 does not contain any congressional earmarks,
limited tax benefits, or limited tariff benefits as defined in
clause 9 of House Rule XXI.
Roll Call Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee Report to include for
each record vote on a motion to report the measure or matter
and on any amendments offered to the measure or matter the
total number of votes for and against and the names of the
Members voting for and against.
Statement of General Performance Goals and Objectives
In accordance with clause 3(c) of House Rule XIII, the goal
of H.R. 1406 is to provide for compensatory time for employees
in the private-sector. The Committee expects the Department of
Labor to comply with these provisions and implement the changes
to the law in accordance with this stated goal.
Duplication of Federal Programs
No provision of H.R. 1406 establishes or reauthorizes a
program of the Federal Government known to be duplicative of
another Federal program, a program that was included in any
report from the Government Accountability Office to Congress
pursuant to section 21 of Public Law 111-139, or a program
related to a program identified in the most recent Catalog of
Federal Domestic Assistance.
Disclosure of Directed Rule Makings
The committee estimates that enacting H.R. 1406 does not
specifically direct the completion of any specific rule makings
within the meaning of 5 U.S.C. 551.
Statement of Oversight Findings and Recommendations of the Committee
In compliance with clause 3(c)(1) of rule XIII and clause
2(b)(1) of rule X of the Rules of the House of Representatives,
the Committee's oversight findings and recommendations are
reflected in the body of this report.
New Budget Authority and CBO Cost Estimate
With respect to the requirements of clause 3(c)(2) of rule
XIII of the Rules of the House of Representatives and section
308(a) of the Congressional Budget Act of 1974 and with respect
to requirements of clause 3(c)(3) of rule XIII of the Rules of
the House of Representatives and section 402 of the
Congressional Budget Act of 1974, the Committee has received
the following estimate for H.R. 1406 from the Director of the
Congressional Budget Office:
U.S. Congress,
Congressional Budget Office,
Washington, DC, April 19, 2013.
Hon. John Kline,
Chairman, Committee on Education and the Workforce,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 1406, the Working
Families Flexibility Act of 2013.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Christina
Hawley Anthony.
Sincerely,
Douglas W. Elmendorf, Director.
Enclosure.
H.R. 1406--Working Families Flexibility Act of 2013
H.R. 1406 would amend the Fair Labor Standards Act of 1938
to provide compensatory time for employees in the private
sector. In lieu of overtime pay, employees could receive
compensatory time off at a rate not less than one and one-half
hours for each hour of employment for which overtime pay would
otherwise have been required. Such compensatory time could be
provided only in accordance with a collective bargaining
agreement or with the consent of affected employees. The
changes would be effective for five years after enactment of
the bill.
Enacting H.R. 1406 would not affect direct spending or
revenues; therefore, pay-as-you-go procedures do not apply.
Implementing the bill also would not affect spending subject to
appropriation.
H.R. 1406 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would impose no costs on state, local, or tribal governments.
The CBO staff contact for this estimate is Christina Hawley
Anthony. The estimate was approved by Peter H. Fontaine,
Assistant Director for Budget Analysis.
Committee Cost Estimate
Clause 3(d)(1) of rule XIII of the Rules of the House of
Representatives requires an estimate and a comparison of the
costs that would be incurred in carrying out H.R. 1406.
However, clause 3(d)(2)(B) of that rule provides that this
requirement does not apply when the Committee has included in
its report a timely submitted cost estimate of the bill
prepared by the Director of the Congressional Budget Office
under section 402 of the Congressional Budget Act.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (new matter is
printed in italic and existing law in which no change is
proposed is shown in roman):
FAIR LABOR STANDARDS ACT OF 1938
* * * * * * *
MAXIMUM HOURS
Sec. 7. (a)(1) Except as otherwise provided in this section,
no employer shall employ any of his employees who in any
workweek is engaged in commerce or in the production of goods
for commerce, or is employed in an enterprise engaged in
commerce or in the production of goods for commerce, for a
workweek longer than forty hours unless such employee receives
compensation for his employment in excess of the hours above
specified at a rate not less than one and one-half times the
regular rate at which he is employed.
(2) No employer shall employ any of his employees who in any
workweek is engaged in commerce or in the production of goods
for commerce, or is employed in an enterprise engaged in
commerce or in the production of goods for commerce, and who in
such workweek is brought within the purview of this subsection
by the amendments made to this Act by the Fair Labor Standards
Amendments of 1966--
(A) for a workweek longer than forty-four hours
during the first year from the effective date of the
Fair Labor Standards Amendments of 1966,
(B) for a workweek longer than forty-two hours during
the second year from such date, or
(C) for a workweek longer than forty hours after the
expiration of the second year from such date,
unless such employee receives compensation for his employment
in excess of the hours above specified at a rate not less than
one and one-half times the regular rate at which he is
employed.
(b) No employer shall be deemed to have violated subsection
(a) by employing any employee for a workweek in excess of that
specified in such subsection without paying the compensation
for overtime employment prescribed therein if such employee is
so employed--
(1) in pursuance of an agreement, made as a result of
collective bargaining by representatives of employees
certified as bona fide by the National Labor Relations
Board, which provides that no employee shall be
employed more than one thousand and forty hours during
any period of twenty-six consecutive weeks, or
(2) in pursuance of an agreement, made as a result of
collective bargaining by representatives of employees
certified as bona fide by the National Labor Relations
Board which provides that during a specified period of
fifty-two consecutive weeks the employee shall be
employed not more than two thousand two hundred and
forty hours and shall be guaranteed not less than one
thousand eight hundred and forty hours (or not less
than forty-six weeks at the normal number of hours
worked per week, but not less than thirty hours per
week) and not more than two thousand and eighty hours
of employment for which he shall receive compensation
for all hours guaranteed or worked at rates not less
than those applicable under the agreement to the work
performed and for all hours in excess of the guaranty
which are also in excess of the maximum workweek
applicable to such employee under subsection (a) or two
thousand and eighty in such period at rates not less
than one and one-half times the regular rate at which
he is employed; or
(3) by an independently owned and controlled local
enterprise (including an enterprise with more than one
bulk storage establishment) engaged in the wholesale or
bulk distribution of petroleum products if--
(A) the annual gross volume of sales of such
enterprise is less than $1,000,000 exclusive of
excise taxes.
(B) more than 75 per centum of such
enterprise's annual dollar volume of sales is
made within the State in which such enterprise
is located, and
(C) not more than 25 per centum of the annual
dollar volume of sales of such enterprise is to
customers who are engaged in the bulk
distribution of such products for resale;
and if such employee receives compensation for employment in
excess of twelve hours in any workday, or for employment in
excess of fifty-six hours in any workweek, as the case may be,
at a rate not less than one and one-half times the regular rate
at which he is employed.
(e) As used in this section the ``regular rate'' at which an
employee is employed shall be deemed to include all
remuneration for employment paid to, or on behalf of, the
employee, but shall not be deemed to include--
(1) sums paid as gifts; payments in the nature of
gifts made at Christmas time or on other special
occasions, as a reward for service, the amounts of
which are not measured by or dependent on hours worked,
production, or efficiency;
(2) payments made for occasional periods when no work
is performed due to vacation, holiday, illness, failure
of the employer to provide sufficient work or other
similar cause; reasonable payments for traveling
expenses, or other expenses, incurred by an employee in
the furtherance of his employer's interests and
properly reimburseable by the employer; and other
similar payments to any employee which are not made as
compensation for his hours of employment;
(3) sums paid in recognition of services performed
during a given period if either, (a) both the fact that
payment is to be made and the amount of the payment are
determined at the sole discretion of the employer at or
near the end of the period and not pursuant to any
prior contract, agreement, or promise causing the
employee to expect such payments regularly; or (b) the
payments are made pursuant to a bona fide profit-
sharing plan or trust or bona fide thrift or savings
plan, meeting the requirements of the Secretary of
Labor set forth in appropriate regulations which he
shall issue, having due regard among other relevant
facts, to the extent to which the amounts paid to the
employee are determined without regard to hours of
work, production, or efficiency; or (c) the payments
are talent fees (as such talent fees are defined and
delimited by regulations of the Secretary) paid to
performers, including announcers, on radio and
television programs;
(4) contributions irrevocably made by an employer to
a trustee or third person pursuant to a bona fide plan
for providing old-age retirement, life, accident, or
health insurance or similar benefits for employees;
(5) extra compensation provided by a premium rate
paid for certain hours worked by the employee in any
day or workweek because such hours are hours worked in
excess of eight in a day or in excess of the maximum
workweek applicable to such employee under subsection
(a) or in excess of the employee's normal working hours
or regular working hours, as the case may be;
(6) extra compensation provided by a premium rate
paid for work by the employee on Saturdays, Sundays,
holidays, or regular days of rest, or on the sixth or
seventh day of the workweek, where such premium rate is
not less than one and one-half times the rate
established in good faith for like work performed in
nonovertime hours on other days;
(7) extra compensation provided by a premium rate
paid to the employee, in pursuance of an applicable
employment contract or collective-bargaining agreement,
for work outside of the hours established in good faith
by the contract or agreement as the basic, normal, or
regular workday (not exceeding eight hours) or workweek
(not exceeding the maximum workweek applicable to such
employee under subsection (a)), where such premium rate
is not less than one and one-half times the rate
established in good faith by the contract or agreement
for like work performed during such workday or
workweek; or
(8) any value or income derived from employer-
provided grants or rights provided pursuant to a stock
option, stock appreciation right, or bona fide employee
stock purchase program which is not otherwise
excludable under any of paragraphs (1) through (7) if--
(A) grants are made pursuant to a program,
the terms and conditions of which are
communicated to participating employees either
at the beginning of the employee's
participation in the program or at the time of
the grant;
(B) in the case of stock options and stock
appreciation rights, the grant or right cannot
be exercisable for a period of at least 6
months after the time of grant (except that
grants or rights may become exercisable because
of an employee's death, disability, retirement,
or a change in corporate ownership, or other
circumstances permitted by regulation), and the
exercise price is at least 85 percent of the
fair market value of the stock at the time of
grant;
(C) exercise of any grant or right is
voluntary; and
(D) any determinations regarding the award
of, and the amount of, employer-provided grants
or rights that are based on performance are--
(i) made based upon meeting
previously established performance
criteria (which may include hours of
work, efficiency, or productivity) of
any business unit consisting of at
least 10 employees or of a facility,
except that, any determinations may be
based on length of service or minimum
schedule of hours or days of work; or
(ii) made based upon the past
performance (which may include any
criteria) of one or more employees in a
given period so long as the
determination is in the sole discretion
of the employer and not pursuant to any
prior contract.
(f) No employer shall be deemed to have violated subsection
(a) by employing any employee for a workweek in excess of the
maximum workweek applicable to such employee under subsection
(a) if such employee is employed pursuant to a bona fide
individual contract, or pursuant to an agreement made as a
result of collective bargaining by representatives of
employees, if the duties of such employee necessitate irregular
hours of work, and the contract or agreement (1) specifies a
regular rate of pay of not less than the minimum hourly rate
provided in subsection (a) or (b) of section 6 (whichever may
be applicable) and compensation at not less than one and one-
half times such rate for all hours worked in excess of such
maximum workweek, and (2) provides a weekly guaranty of pay for
not more than sixty hours based on the rates so specified.
(g) No employer shall be deemed to have violated subsection
(a) by employing any employee for a workweek in excess of the
maximum workweek applicable to such employee under such
subsection if, pursuant to an agreement or understanding
arrived at between the employer and the employee before
performance of the work, the amount paid to the employee for
the number of hours worked by him in such workweek in excess of
the maximum workweek applicable to such employee under such
subsection--
(1) in the case of an employee employed at piece
rates, is computed at piece rates not less than one and
one-half times the bona fide piece rates applicable to
the same work when performed during nonovertime hours;
or
(2) in the case of an employee performing two or more
kinds of work for which different hourly or piece rates
have been established, is computed at rates not less
than one and one-half times such bona fide rates
applicable to the same work when performed during
nonovertime hours; or
(3) is computed at a rate not less than one and one-
half times the rate established by such agreement or
understanding as the basic rate to be used in computing
overtime compensation thereunder: Provided, That the
rate so established shall be authorized by regulation
by the Secretary of Labor as being substantially
equivalent to the average hourly earnings of the
employee, exclusive of overtime premiums, in the
particular work over a representative period of time;
and if (i) the employee's average hourly earnings for the
workweek exclusive of payments described in paragraphs (1)
through (7) of subsection (e) are not less than the minimum
hourly rate required by applicable law, and (ii) extra overtime
compensation is properly computed and paid on other forms of
additional pay required to be included in computing the regular
rate.
(h)(1) Except as provided in paragraph (2), sums excluded
from the regular rate pursuant to subsection (e) shall not be
creditable toward wages required under section 6 or overtime
compensation required under this section.
(2) Extra compensation paid as described in paragraphs (5),
(6), and (7) of subsection (e) shall be creditable toward
overtime compensation payable pursuant to this section.
(i) No employer shall be deemed to have violated subsection
(a) by employing any employee of a retail or service
establishment for a workweek in excess of the applicable
workweek specified therein, if (1) the regular rate of pay of
such employee is in excess of one and one-half times the
minimum hourly rate applicable to him under section 6, and (2)
more than half his compensation for a representative period
(not less than one month) represents commissions on goods or
services. In determining the proportion of compensation
representing commissions, all earnings resulting from the
application of a bona fide commission rate shall be deemed
commissions on goods or services without regard to whether the
computed commissions exceed the draw or guarantee.
(j) No employer engaged in the operation of a hospital or an
establishment which is an institution primarily engaged in the
care of the sick, the aged, or the mentally ill or defective
who reside on the premises shall be deemed to have violated
subsection (a) if, pursuant to an agreement or understanding
arrived at between the employer and the employee before
performance of the work, a work period of fourteen consecutive
days is accepted in lieu of the workweek of seven consecutive
days for purposes of overtime computation and if, for his
employment in excess of eight hours in any workday and in
excess of eighty hours in such fourteen-day period, the
employee receives compensation at a rate of not less than one
and one-half times the regular rate at which he is employed.
(k) No public agency shall be deemed to have violated
subsection (a) with respect to the employment of any employee
in fire protection activities or any employee in law
enforcement activities (including security personnel in
correctional institutions) if--
(1) in a work period of 28 consecutive days the
employee receives for tours of duty which in the
aggregate exceed the lesser of (A) 216 hours, or (B)
the average number of hours (as determined by the
Secretary pursuant to section 6(c)(3) of the Fair Labor
Standards Amendments of 1974) in tours of duty of
employees engaged in such activities in work periods of
28 consecutive days in calendar year 1975; or
(2) in the case of such employee to whom a work
period of at least 7 but less than 28 days applies, in
his work period the employee receives for tours of duty
which in the aggregate exceed a number of hours which
bears the same ratio to the number of consecutive days
in his work period as 216 hours (or if lower, the
number of hours referred to in clause (B) of paragraph
(1)) bears to 28 days;
compensation at a rate not less than one and one-half times the
regular rate at which he is employed.
(l) No employer shall employ any employee in domestic service
in one or more households for a workweek longer than forty
hours unless such employee receives compensation for such
employment in accordance with subsection (a).
(m) For a period or periods of not more than fourteen
workweeks in the aggregate in any calendar year, any employer
may employ any employee for a workweek in excess of that
specified in subsection (a) without paying the compensation for
overtime employment prescribed in such subsection, if such
employee--
(1) is employed by such employer--
(A) to provide services (including stripping
and grading) necessary and incidental to the
sale at auction of green leaf tobacco of type
11, 12, 13, 14, 21, 22, 23, 24, 31, 35, 36, or
37 (as such types are defined by the Secretary
of Agriculture), or in auction sale, buying,
handling, stemming, redrying, packing, and
storing of such tobacco,
(B) in auction sale, buying, handling,
sorting, grading, packing, or storing green
leaf tobacco of type 32 (as such type is
defined by the Secretary of Agriculture), or
(C) in auction sale, buying, handling,
stripping, sorting, grading, sizing, packing,
or stemming prior to packing, of perishable
cigar leaf tobacco of type 41, 42, 43, 44, 45,
46, 51, 52, 53, 54, 55, 61, or 62 (as such
types are defined by the Secretary of
Agriculture); and
(2) receives for--
(A) such employment by such employer which is
in excess of ten hours in any workday, and
(B) such employment by such employer which is
in excess of forty-eight hours in any workweek,
compensation at a rate not less than one and one-half
times the regular rate at which he is employed.
An employer who receives an exemption under this subsection
shall not be eligible for any other exemption under this
section.
(n) In the case of an employee of an employer engaged in the
business of operating a street, suburban or interurban electric
railway or local trolley or motorbus carrier (regardless of
whether or not such railway or carrier is public or private or
operated for profit or not for profit), in determining the
hours of employment of such an employee to which the rate
prescribed by subsection (a) applies there shall be excluded
the hours such employee was employed in charter activities by
such employer if (1) the employee's employment in such
activities was pursuant to an agreement or understanding with
his employer arrived at before engaging in such employment, and
(2) if employment in such activities is not part of such
employee's regular employment.
(o)(1) Employees of a public agency which is a State, a
political subdivision of a State, or an interstate governmental
agency may receive, in accordance with this subsection and in
lieu of overtime compensation, compensatory time off at a rate
not less than one and one-half hours for each hour of
employment for which overtime compensation is required by this
section.
(2) A public agency may provide compensatory time under
paragraph (1) only--
(A) pursuant to--
(i) applicable provisions of a collective
bargaining agreement, memorandum of
understanding, or any other agreement between
the public agency and representatives of such
employees; or
(ii) in the case of employees not covered by
subclause (i), an agreement or understanding
arrived at between the employer and employee
before the performance of the work; and
(B) if the employee has not accrued compensatory time
in excess of the limit applicable to the employee
prescribed by paragraph (3).
In the case of employees described in clause (A)(ii) hired
prior to April 15, 1986, the regular practice in effect on
April 15, 1986, with respect to compensatory time off for such
employees in lieu of the receipt of overtime compensation,
shall constitute an agreement or understanding under such
clause (A)(ii). Except as provided in the previous sentence,
the provision of compensatory time off to such employees for
hours worked after April 14, 1986, shall be in accordance with
this subsection.
(3)(A) If the work of an employee for which compensatory time
may be provided included work in a public safety activity, an
emergency response activity, or a seasonal activity, the
employee engaged in such work may accrue not more than 480
hours of compensatory time for hours worked after April 15,
1986. If such work was any other work, the employee engaged in
such work may accrue not more than 240 hours of compensatory
time for hours worked after April 15, 1986. Any such employee
who, after April 15, 1986, has accrued 480 or 240 hours, as the
case may be, of compensatory time off shall, for additional
overtime hours of work, be paid overtime compensation.
(B) If compensation is paid to an employee for accrued
compensatory time off, such compensation shall be paid at the
regular rate earned by the employee at the time the employee
receives such payment.
(4) An employee who has accrued compensatory time off
authorized to be provided under paragraph (1) shall, upon
termination of employment, be paid for the unused compensatory
time at a rate of compensation not less than--
(A) the average regular rate received by such
employee during the last 3 years of the employee's
employment, or
(B) the final regular rate received by such employee,
whichever is higher
(5) An employee of a public agency which is a State,
political subdivision of a State, or an interstate governmental
agency--
(A) who has accrued compensatory time off authorized
to be provided under paragraph (1), and
(B) who has requested the use of such compensatory
time,
shall be permitted by the employee's employer to use such time
within a reasonable period after making the request if the use
of the compensatory time does not unduly disrupt the operations
of the public agency.
(6) The hours an employee of a public agency performs court
reporting transcript preparation duties shall not be considered
as hours worked for the purposes of subsection (a) if--
(A) such employee is paid at a per-page rate which is
not less than--
(i) the maximum rate established by State law
or local ordinance for the jurisdiction of such
public agency,
(ii) the maximum rate otherwise established
by a judicial or administrative officer and in
effect on July 1, 1995, or
(iii) the rate freely negotiated between the
employee and the party requesting the
transcript, other than the judge who presided
over the proceedings being transcribed, and
(B) the hours spent performing such duties are
outside of the hours such employee performs other work
(including hours for which the agency requires the
employee's attendance) pursuant to the employment
relationship with such public agency.
For purposes of this section, the amount paid such employee in
accordance with subparagraph (A) for the performance of court
reporting transcript preparation duties, shall not be
considered in the calculation of the regular rate at which such
employee is employed.
(7) For purposes of this subsection--
(A) the term ``overtime compensation'' means the
compensation required by subsection (a), and
(B) the terms ``compensatory time'' and
``compensatory time off'' mean hours during which an
employee is not working, which are not counted as hours
worked during the applicable workweek or other work
period for purposes of overtime compensation, and for
which the employee is compensated at the employee's
regular rate.
(p)(1) If an individual who is employed by a State, political
subdivision of a State, or an interstate governmental agency in
fire protection or law enforcement activities (including
activities of security personnel in correctional institutions)
and who, solely at such individual's option, agrees to be
employed on a special detail by a separate or independent
employer in fire protection, law enforcement, or related
activities, the hours such individual was employed by such
separate and independent employer shall be excluded by the
public agency employing such individual in the calculation of
the hours for which the employee is entitled to overtime
compensation under this section if the public agency--
(A) requires that its employees engaged in fire
protection, law enforcement, or security activities be
hired by a separate and independent employer to perform
the special detail,
(B) facilitates the employment of such employees by a
separate and independent employer, or
(C) otherwise affects the condition of employment of
such employees by a separate and independent employer.
(2) If an employee of a public agency which is a State,
political subdivision of a State, or an interstate governmental
agency undertakes, on an occasional or sporadic basis and
solely at the employee's option, part-time employment for the
public agency which is in a different capacity from any
capacity in which the employee is regularly employed with the
public agency, the hours such employee was employed in
performing the different employment shall be excluded by the
public agency in the calculation of the hours for which the
employee is entitled to overtime compensation under this
section.
(3) If an individual who is employed in any capacity by a
public agency which is a State, political subdivision of a
State, or an interstate governmental agency, agrees, with the
approval of the public agency and solely at the option of such
individual, to substitute during scheduled work hours for
another individual who is employed by such agency in the same
capacity, the hours such employee worked as a substitute shall
be excluded by the public agency in the calculation of the
hours for which the employee is entitled to overtime
compensation under this section.
(q) Any employer may employ any employee for a period or
periods of not more than 10 hours in the aggregate in any
workweek in excess of the maximum workweek specified in
subsection (a) without paying the compensation for overtime
employment prescribed in such subsection, if during such period
or periods the employee is receiving remedial education that
is--
(1) provided to employees who lack a high school
diploma or educational attainment at the eighth grade
level;
(2) designed to provide reading and other basic
skills at an eighth grade level or below; and
(3) does not include job specific training.
(r)(1) An employer shall provide--
(A) a reasonable break time for an employee to
express breast milk for her nursing child for 1 year
after the child's birth each time such employee has
need to express the milk; and
(B) a place, other than a bathroom, that is shielded
from view and free from intrusion from coworkers and
the public, which may be used by an employee to express
breast milk.
(2) An employer shall not be required to compensate an
employee receiving reasonable break time under paragraph (1)
for any work time spent for such purpose.
(3) An employer that employs less than 50 employees shall not
be subject to the requirements of this subsection, if such
requirements would impose an undue hardship by causing the
employer significant difficulty or expense when considered in
relation to the size, financial resources, nature, or structure
of the employer's business.
(4) Nothing in this subsection shall preempt a State law that
provides greater protections to employees than the protections
provided for under this subsection.
(s) Compensatory Time Off for Private Employees.--
(1) General rule.--An employee may receive, in
accordance with this subsection and in lieu of monetary
overtime compensation, compensatory time off at a rate
not less than one and one-half hours for each hour of
employment for which overtime compensation is required
by this section.
(2) Conditions.--An employer may provide compensatory
time to employees under paragraph (1)(A) only if such
time is provided in accordance with--
(A) applicable provisions of a collective
bargaining agreement between the employer and
the labor organization that has been certified
or recognized as the representative of the
employees under applicable law; or
(B) in the case of employees who are not
represented by a labor organization that has
been certified or recognized as the
representative of such employees under
applicable law, an agreement arrived at between
the employer and employee before the
performance of the work and affirmed by a
written or otherwise verifiable record
maintained in accordance with section 11(c)--
(i) in which the employer has offered
and the employee has chosen to receive
compensatory time in lieu of monetary
overtime compensation; and
(ii) entered into knowingly and
voluntarily by such employees and not
as a condition of employment.
No employee may receive or agree to receive
compensatory time off under this subsection unless the
employee has worked at least 1,000 hours for the
employee's employer during a period of continuous
employment with the employer in the 12-month period
before the date of agreement or receipt of compensatory
time off.
(3) Hour limit.--
(A) Maximum hours.--An employee may accrue
not more than 160 hours of compensatory time.
(B) Compensation date.--Not later than
January 31 of each calendar year, the
employee's employer shall provide monetary
compensation for any unused compensatory time
off accrued during the preceding calendar year
that was not used prior to December 31 of the
preceding year at the rate prescribed by
paragraph (6). An employer may designate and
communicate to the employer's employees a 12-
month period other than the calendar year, in
which case such compensation shall be provided
not later than 31 days after the end of such
12-month period.
(C) Excess of 80 hours.--The employer may
provide monetary compensation for an employee's
unused compensatory time in excess of 80 hours
at any time after giving the employee at least
30 days notice. Such compensation shall be
provided at the rate prescribed by paragraph
(6).
(D) Policy.--Except where a collective
bargaining agreement provides otherwise, an
employer that has adopted a policy offering
compensatory time to employees may discontinue
such policy upon giving employees 30 days
notice.
(E) Written request.--An employee may
withdraw an agreement described in paragraph
(2)(B) at any time. An employee may also
request in writing that monetary compensation
be provided, at any time, for all compensatory
time accrued that has not yet been used. Within
30 days of receiving the written request, the
employer shall provide the employee the
monetary compensation due in accordance with
paragraph (6).
(4) Private employer actions.--An employer that
provides compensatory time under paragraph (1) to
employees shall not directly or indirectly intimidate,
threaten, or coerce or attempt to intimidate, threaten,
or coerce any employee for the purpose of--
(A) interfering with such employee's rights
under this subsection to request or not request
compensatory time off in lieu of payment of
monetary overtime compensation for overtime
hours; or
(B) requiring any employee to use such
compensatory time.
(5) Termination of employment.--An employee who has
accrued compensatory time off authorized to be provided
under paragraph (1) shall, upon the voluntary or
involuntary termination of employment, be paid for the
unused compensatory time in accordance with paragraph
(6).
(6) Rate of compensation.--
(A) General rule.--If compensation is to be
paid to an employee for accrued compensatory
time off, such compensation shall be paid at a
rate of compensation not less than--
(i) the regular rate received by such
employee when the compensatory time was
earned; or
(ii) the final regular rate received
by such employee,
whichever is higher.
(B) Consideration of payment.--Any payment
owed to an employee under this subsection for
unused compensatory time shall be considered
unpaid overtime compensation.
(7) Use of time.--An employee--
(A) who has accrued compensatory time off
authorized to be provided under paragraph (1);
and
(B) who has requested the use of such
compensatory time,
shall be permitted by the employee's employer to use
such time within a reasonable period after making the
request if the use of the compensatory time does not
unduly disrupt the operations of the employer.
(8) Definitions.--For purposes of this subsection--
(A) the term ``employee'' does not include an
employee of a public agency; and
(B) the terms ``overtime compensation'' and
``compensatory time'' shall have the meanings
given such terms by subsection (o)(7).
* * * * * * *
PENALTIES
Sec. 16. (a) Any person who willfully violates any of the
provisions of section 15 shall upon conviction thereof be
subject to a fine of not more than $10,000, or to imprisonment
for not more than six months, or both. No person shall be
imprisoned under this subsection except for an offense
committed after the conviction of such person for a prior
offense under this subsection.
[(b) Any employer] (b) Except as provided in subsection (f),
any employer who violates the provisions of section 6 or
section 7 of this Act shall be liable to the employee or
employees affected in the amount of their unpaid minimum wages,
or the unpaid overtime compensation, as the case may be, and in
an additional equal amount as liquidated damages. Any employer
who violates the provisions of section 15(a)(3) of this Act
shall be liable for such legal or equitable relief as may be
appropriate to effectuate the purposes of section 15(a)(3),
including without limitation employment, reinstatement,
promotion, and the payment of wages lost and an additional
equal amount as liquidated damages. An action to recover the
liability prescribed in either of the preceding sentences may
be maintained against any employer (including a public agency)
in any Federal or State court of competent jurisdiction by any
one or more employees for and in behalf of himself or
themselves and other employees similarly situated. No employees
shall be a party plaintiff to any such action unless he gives
his consent in writing to become such a party and such consent
is filed in the court in which such action is brought. The
court in such action shall, in addition to any judgment awarded
to the plaintiff or plaintiffs, allow a reasonable attorney's
fee to be paid by the defendant, and costs of the action. The
right provided by this subsection to bring an action by or on
behalf of any employee, and the right of any employee to become
a party plaintiff to any such action, shall terminate upon the
filing of a complaint by the Secretary of Labor in an action
under section 17 in which (1) restraint is sought of any
further delay in the payment of unpaid minimum wages, or the
amount of unpaid overtime compensation, as the case may be,
owing to such employee under section 6 or section 7 of this act
by an employer liable therefor under the provisions of this
subsection or (2) legal or equitable relief is sought as a
result of alleged violations of section 15(a)(3).
(c) The Secretary is authorized to supervise the payment of
the unpaid minimum wages or the unpaid overtime compensation
owing to any employee or employees under section 6 or 7 of this
Act, and the agreement of any employee to accept such payment
shall upon payment in full constitute a waiver by such employee
of any right he may have under subsection (b) of this section
to such unpaid minimum wages or unpaid overtime compensation
and an additional equal amount as liquidated damages. The
Secretary may bring an action in any court of competent
jurisdiction to recover the amount of the unpaid minimum wages
or overtime compensation and an equal amount as liquidated
damages. The right provided by subsection (b) to bring an
action by or on behalf of any employee to recover the liability
specified in the first sentence of such subsection and of any
employee to become a party plaintiff to any such action shall
terminate upon the filing of a complaint by the Secretary in an
action under this subsection in which a recovery is sought of
unpaid minimum wages or unpaid overtime compensation under
sections 6 and 7 or liquidated or other damages provided by
this subsection owing to such employee by an employer liable
under the provisions of subsection (b), unless such action is
dismissed without prejudice on motion of the Secretary. Any
sums thus recovered by the Secretary on behalf of an employee
pursuant to this subsection shall be held in a special deposit
account and shall be paid, on order of the Secretary, directly
to the employee or employees affected. Any such sums not paid
to an employee because of inability to do so within a period of
three years shall be covered into the Treasury of the United
States as miscellaneous receipts. In determining when an action
is commenced by the Secretary under this subsection for the
purposes of the statutes of limitations provided in section
6(a) of the Portal-to-Portal Act of 1947, it shall be
considered to be commenced in the case of any individual
claimant on the date when the complaint is filed if he is
specifically named as a party plaintiff in the complaint, or if
his name did not so appear, on the subsequent date on which his
name is added as a party plantiff in such action.
(d) In any action or proceeding commenced prior to, on, or
after the date of enactment of this subsection, no employer
shall be subject to any liability or punishment under this Act
or the Portal-to-Portal Act of 1947 on account of his failure
to comply with any provision or provisions of such Acts (1)
with respect to work heretofore or hereafter performed in a
workplace to which the exemption in section 13(f) is
applicable, (2) with respect to work performed in Guam, the
Canal Zone, or Wake Island before the effective date of this
amendment of subsection (d), or (3) with respect to work
performed in a possession named in section 6(a)(3) at any time
prior to the establishment by the Secretary, as provided
therein, of a minimum wage rate applicable to such work.
(e)(1)(A) Any person who violates the provisions of sections
12 or 13(c), relating to child labor, or any regulation issued
pursuant to such sections, shall be subject to a civil penalty
not to exceed--
(i) $11,000 for each employee who was the subject of
such a violation; or
(ii) $50,000 with regard to each such violation that
causes the death or serious injury of any employee
under the age of 18 years, which penalty may be doubled
where the violation is a repeated or willful violation.
(B) For purposes of subparagraph (A), the term ``serious
injury'' means--
(i) permanent loss or substantial impairment of one
of the senses (sight, hearing, taste, smell, tactile
sensation);
(ii) permanent loss or substantial impairment of the
function of a bodily member, organ, or mental faculty,
including the loss of all or part of an arm, leg, foot,
hand or other body part; or
(iii) permanent paralysis or substantial impairment
that causes loss of movement or mobility of an arm,
leg, foot, hand or other body part.
(2) Any person who repeatedly or willfully violates section 6
or 7, relating to wages, shall be subject to a civil penalty
not to exceed $1,100 for each such violation.
(3) In determining the amount of any penalty under this
subsection, the appropriateness of such penalty to the size of
the business of the person charged and the gravity of the
violation shall be considered. The amount of any penalty under
this subsection, when finally determined, may be--
(A) deducted from any sums owing by the United States
to the person charged;
(B) recovered in a civil action brought by the
Secretary in any court of competent jurisdiction, in
which litigation the Secretary shall be represented by
the Solicitor of Labor; or
(C) ordered by the court, in an action brought for a
violation of section 15(a)(4) or a repeated or willful
violation of section 15(a)(2), to be paid to the
Secretary.
(4) Any administrative determination by the Secretary of the
amount of any penalty under this subsection shall be final,
unless within 15 days after receipt of notice thereof by
certified mail the person charged with the violation takes
exception to the determination that the violations for which
the penalty is imposed occurred, in which event final
determination of the penalty shall be made in an administrative
proceeding after opportunity for hearing in accordance with
section 554 of title 5, United States Code, and regulations to
be promulgated by the Secretary.
(5) Except for civil penalties collected for violations of
section 12, sums collected as penalties pursuant to this
section shall be applied toward reimbursement of the costs of
determining the violations and assessing and collecting such
penalties, in accordance with the provision of section 2 of the
Act entitled ``An Act to authorize the Department of Labor to
make special statistical studies upon payment of the cost
thereof and for other purposes'' (29 U.S.C. 9a). Civil
penalties collected for violations of section 12 shall be
deposited in the general fund of the Treasury.
(f) An employer that violates section 7(s)(4) shall be liable
to the employee affected in the amount of the rate of
compensation (determined in accordance with section 7(s)(6)(A))
for each hour of compensatory time accrued by the employee and
in an additional equal amount as liquidated damages reduced by
the amount of such rate of compensation for each hour of
compensatory time used by such employee.
* * * * * * *
MINORITY VIEWS
H.R. 1406, ``THE WORKING FAMILIES FLEXIBILITY ACT''
113TH CONGRESS, 1ST SESSION
APRIL 30, 2013
Committee Democrats oppose H.R. 1406. This bill would amend
the Fair Labor Standards Act (FLSA) to allow private sector
employers to ``compensate'' hourly workers with compensatory
(``comp'') time off in lieu of overtime pay. By forcing workers
to compromise their paycheck in order to have more time off
work, with no guarantee that they would actually receive the
time off when they need it, this bill would jeopardize the
economic well-being of millions of Americans who depend on
overtime wages to make ends meet.
H.R. 1406 does nothing to provide working families with
meaningful flexibility. Instead, it rolls back the clock on
vital gains that working people achieved with the passage of
the FLSA in 1938. It cuts wages for middle class and low-income
Americans at a time when they are already facing overwhelming
financial stress. It gives employers--not employees--
flexibility in setting working hours. It impedes enforcement of
overtime laws. In short, it undermines one of the most
important, hard-fought legal protections that workers currently
depend upon.
This bill is being pushed through by House leadership as
part of rebranding campaign to soften the majority's image with
a supposedly ``family friendly'' agenda.\1\ Unfortunately,
rather than presenting this Committee with a proposal that
would actually benefit working families, the majority has
simply reintroduced a proposal that would let employers pay
workers less. The bill forces workers into an unnecessary
choice between earned overtime pay and family-friendly
scheduling. Congress ought to pass legislation that both
protects earned overtime pay and promotes needed flexibility in
the workplace. H.R. 1406 simply rehashes a worn-out decades-old
idea that has been rejected multiple times in the past, and it
will meet the same fate this time around by never advancing
beyond the House.
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\1\See Eric Cantor, ``Making Life Work'' Remarks for the AEI,
February 5, 2013. Available at http://www.aei.org/article/politics-and-
public-opinion/legislative/house/remarks-by-majority-leader -eric-
cantor-as-prepared-for-delivery.
---------------------------------------------------------------------------
Instead of H.R. 1406, what working families really need is
legislation that would raise the minimum wage, ensure equal pay
for equal work, provide paid sick leave to workers, provide
paid family & medical leave for more workers and expand the
Family and Medical Leave Act to include more employees. These
are the kinds of changes that would make a real difference in
the lives of working Americans, not a rushed proposal that
undermines bedrock employment law and costs workers much needed
overtime compensation.
THE FAIR LABOR STANDARDS ACT
Background on the FLSA's wage and hour protections
In the 1930s, Congress saw the need for legislation to
address the widespread ``labor conditions detrimental to the
maintenance of the minimum standard of living necessary for
health, efficiency, and general well-being of workers.''\2\
This concern ultimately led to the passage of the FLSA in 1938,
which to this day stands as one of the crowning achievements of
the New Deal. This crucial law establishes a federal minimum
wage, restricts the use of child labor, and sets standards for
when employers must pay workers overtime.\3\ President Harry
Truman, who served in the Senate when Congress was considering
the FLSA, would later describe it as ``[o]ne of the most
important bills for which I voted. . . . [It was one of the]
fundamental New Deal measures . . . intended to help the little
people in labor who had no lobby and no influence.''\4\
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\2\29 U.S.C. Sec. 202(a).
\3\29 U.S.C. Sec. Sec. 201-217.
\4\Memoirs by Harry S. Truman, Year of Decisions (Vol. 1) (1955),
at 153.
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Seventy-five years after its enactment, the FLSA remains
the nation's basic law governing wages and hours of work. There
are three main protections afforded to workers under this
critical law: (1) a basic minimum wage, (2) a limit on the
number of hours an employer may require from an employee before
being subject to an overtime premium, and (3) a prohibition on
most forms of child labor.\5\
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\5\29 U.S.C. Sec. Sec. 201-219.
---------------------------------------------------------------------------
The maximum hours and overtime provisions are set out in
Section 7 of the FLSA. Currently, the law requires that all
covered employees be compensated for any time that they work in
excess of forty hours in a week at a rate of no less than one-
and-a-half their regular wage rate.\6\ Although the limit on
hours compensable at the regular wage rate is firmly set at
forty, there is nonetheless substantial flexibility in how
these hours are allotted over the course of a week. In the
implementing regulations, a week is defined as a ``fixed and
regularly recurring 168-hour period,''\7\ and there is no
overtime premium for hours worked on weekends.\8\ Accordingly,
the Wage and Hour Division (WHD) of the Department of Labor
(DOL) states that a workweek ``need not coincide with the
calendar week, but may begin on any day and at any hour of the
day. Different workweeks may be established for different
employees or groups of employees.''\9\
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\6\29 U.S.C. Sec. 207(a).
\7\29 C.F.R. Sec. 778.105.
\8\29 C.F.R. Sec. 778.102.
\9\US Department of Labor, Wage and Hour Division, Fact Sheet #23:
Overtime Pay Requirements of the FLSA, http://www.dol.gov/whd/regs/
compliance/whdfs23.pdf. See also 29 C.F.R. Sec. Sec. 778.102, 778.103.
---------------------------------------------------------------------------
There are two primary purposes behind setting a maximum
hour limit and subjecting further hours to an overtime premium:
discouraging overwork and spreading employment. Congress sought
to lessen the burden on workers that comes from working an
``intolerable'' number of hours in a given week.\10\ By
charging a premium for extra work hours, employers are
discouraged from overworking their employees. The other purpose
behind the overtime wage premium is economic in nature
spreading employment, thereby spurring hiring and reducing the
unemployment rate. President Roosevelt argued this point in a
1937 message to Congress: ``Reasonable and flexible use of the
long established right of government to set and to change
working hours can, I hope, decrease unemployment in those
groups in which unemployment today principally exists.''\11\
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\10\President Franklin D. Roosevelt, Annual Message to Congress,
January 3, 1938. Available at http://www.presidency.ucsb.edu/ws/
index.php?pid=15517.
\11\President Franklin D. Roosevelt, Message to Congress on
Establishing Minimum Wages and Maximum Hours, May 24, 1937. Available
at http://www.presidency.ucsb.edu/ws/index.
php?pid=15405&st=wage&st1=/. Former Secretary of Labor Frances Perkins
would later say the maximum hour provisions of the FLSA were key to
achieving both of these goals--and this was especially important to the
war effort during World War II:
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The Wage and Hour Act has been a success, and Roosevelt
took comfort in the fact. Its principal objectives were
accepted. The spread of employment by shorter hours
started. The shorter hours have made a more humane
schedule. The fact that excess hours are penalized by
overtime costs has proved sufficient to keep hours at
reasonable levels and yet flexible enough to make it
possible to work more than forty hours when necessary, as
it was during [World War II].
Frances Perkins, The Roosevelt I Knew (1946), at 266.
As originally enacted, the FLSA contained no provisions
allowing employers to offer comp time in lieu of overtime
wages. However, Congress changed this when it passed the Fair
Labor Standards Amendments of 1985, which introduced a limited
system of comp time for public-sector employees.\12\ Section
7(o) of the FLSA now provides that state and federal public
sector workers are eligible for comp time in lieu of overtime
wages, with the comp time to accumulate at a rate of one and
half times the number of hours worked.\13\ As applied to
federal employees, implementing regulations require that
accrued comp time be used by the end of the 26th pay period
(one year) after the pay period during which the overtime hours
were worked.\14\ Congress's intention in adding this provision
was to provide cost savings in government budgets, as the
overtime wage premium was more expensive than providing workers
with compensatory time off.\15\
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\12\Pub. Law 99-150.
\13\29 U.S.C. Sec. 207.
\14\Office of Personnel Management. ``Fact Sheet: Compensatory Time
Off.'' Available at
http://www.opm.gov/policy-data-oversight/pay-leave/pay-administration/
fact-sheets/compensatory-time-off. See also 5 C.F.R. Sec. 550.114.
\15\Ross Eisenbrey, ``The Naked Truth About Comp Time'' Economic
Policy Institute (March 31, 2003), at 5-6. Available at http://
www.epi.org/page/-/old/issuebriefs/ib190/ib190.pdf
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PAST EFFORTS TO REPLACE OVERTIME WITH COMP TIME
The ideas presented by the majority in H.R. 1406 are
nothing new. Since the 1990s, Committee Republicans have
sponsored numerous virtually identical bills in previous
Congresses, each of which would have weakened overtime
protections through the use of comp time. None of these bills
have come close to being enacted into law.
In 1997, Republicans introduced H.R. 1, the
``Working Families Flexibility Act of 1997,'' which sought to
amend the FLSA to extend comp time to the private sector. This
bill passed the Republican-controlled House and was not
considered by the Senate.\16\
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\16\Available at: http://www.gpo.gov/fdsys/pkg/BILLS-105hr1eh/pdf/
BILLS-105hr1eh.pdf.
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In 2003, Republicans introduced H.R. 1119, the so-
called ``Family Time Flexibility Act,'' which again proposed
extending comp time to the private sector. This bill did not
come up for a vote on the House floor.\17\
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\17\Available at: http://www.gpo.gov/fdsys/pkg/BILLS-108hr1119rh/
pdf/BILLS-108hr1119rh.pdf.
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In 2008, Republicans introduced H.R. 6025, the
``Family Friendly Workplace Act,'' a nearly identical comp time
bill. This bill was never reported out of this Committee.\18\
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\18\Available at: http://www.gpo.gov/fdsys/pkg/BILLS-110hr6025ih/
pdf/BILLS-110hr6025ih.pdf.
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In 2009, Republicans introduced H.R. 933, which
was a reintroduction of the 2008 ``Family Friendly Workplace
Act.'' This bill was also never reported out of this
Committee.\19\
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\19\Available at: http://www.gpo.gov/fdsys/pkg/BILLS-111hr933ih/
pdf/BILLS-111hr933ih.pdf.
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Each comp time bill met firm opposition from worker
advocates and women's organizations, who recognized the harm
these proposals would inflict upon working families. Opponents
of comp time legislation include: the AFL-CIO, the National
Women's Law Center, the National Organization for Women, 9 to
5--National Association of Working Women, SEIU, International
Brotherhood of Teamsters, Communication Workers of America,
Interfaith Worker Justice, National Employment Law Project,
Center for Law and Social Policy, American Sustainable Business
Council and the National Partnership for Women and Families.
THE REAL IMPACT OF H.R. 1406 ON WORKING FAMILIES
H.R. 1406 reduces wages and constitutes an unsecured, interest-free
loan to employers
At its core, the basic intent behind comp time legislation
is to force workers to compromise their pay in order to receive
time off.\20\ This is an unacceptable deal for workers,
particularly in an era of stagnant wages and rising income
inequality. Since 2000, the hourly wage of the median worker
rose just 0.5 percent.\21\ In 2012, corporate profits as a
share of the economy reached their highest point since World
War II, while overall labor compensation fell to a 57-year
low.\22\
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\20\Ross Eisenbrey, ``The Naked Truth About Comp Time'' Economic
Policy Institute (March 31, 2003), at 2. Available at http://
www.epi.org/page/-/old/issuebriefs/ib190/ib190.pdf
\21\Economic Policy Institute. ``Fact Sheet: Wages'' The State of
Working America Available at http://stateofworkingamerica.org/fact-
sheets/wages/
\22\Jeffry Bartash, ``U.S. corporate profits soar in 2012. Workers
get little of it.'' MarketWatch, The Wall Street Journal (March 28,
2013) Available at http://blogs marketwatch.com/thetell/2013/03/28/u-s-
corporate-profits-soar-in-2012-workers-get-little-of-it/
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Nothing in H.R. 1406 requires that workers' comp time
credits earn interest on their wages, though employers are free
to commingle the funds or invest unpaid overtime to their
advantage. This amounts to a zero-interest loan from workers to
their employers. Further, the delay in payment under this bill
is excessively long. When an employee is compensated for unused
comp time, the employer would not actually be required to pay
the employee until January 31 of the following year. For a
worker who puts in extra hours in January of the previous year,
this could mean he or she misses out on wages, plus over a year
of interest on their unpaid wages, while the employer keeps one
hundred percent of the gains. That is an unjustifiable cut in
pay for the worker.
Furthermore, H.R. 1406 also does nothing to protect workers
in the event that their employer goes out of business or
declares bankruptcy. Workers risk losing up to 160 hours of
overtime pay (the limit on overtime hours a worker can bank
under this legislation) because their overtime is not put into
escrow or a trust fund and could be lost if the employer goes
out of business or declares bankruptcy.\23\ This is especially
troubling given the hundreds of thousands of businesses that
close each year--over 690,000 in 2010 alone.\24\
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\23\Ross Eisenbrey, ``The Naked Truth About Comp Time'' Economic
Policy Institute (March 31, 2003) Available at http://www.epi.org/page/
-/old/issuebriefs/ib190/ib190.pdf
\24\U.S. Census Bureau, Business Dynamic Statistics Data Tables:
Establishment Characteristics, Available at http://census.gov/ces/
dataproducts/bds/data_estab.html
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H.R. 1406 discourages hiring new employees
One of the key goals Congress had in requiring employers
pay an overtime premium was to discourage employers from
working their employees for long hours in lieu of hiring more
people.\25\ Even with this wage premium, it is still often
cheaper to work an employee longer hours rather than hiring an
additional employee.\26\ Introducing comp time into the
equation would make this problem worse, as it would be even
cheaper to provide comp time than it is to pay overtime wages.
This is exactly the wrong course in today's economic climate,
in which the unemployment rate is 7.6 percent, and over 11.7
million Americans are looking for work.\27\
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\25\Wage and Hour Division, U.S. Department of Labor, ``Fact Sheet:
Proposed Rule Changes Concerning In-Home Care Industry under the Fair
Labor Standards Act (FLSA)'' Available at http://www.dol.gov/whd/flsa/
whdfs-NPRM-companionship.htm
\26\Ross Eisenbrey, ``The Naked Truth About Comp Time'' Economic
Policy Institute (March 31, 2003), at 4. Available at http://
www.epi.org/page/-/old/issuebriefs/ib190/ib190.pdf
\27\Bureau of Labor Statistics, United States Department of Labor.
(2013). The Employment Situation--March 2013. Retrieved from: http://
www.bls.gov/news.release/pdf/empsit.pdf
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H.R. 1406 gives employers--not employees--the right to control comp
time
Nothing in the FLSA prevents employers from providing
flexibility to workers. Under current law, employers already
may liberally grant paid or unpaid time off to workers. Under
H.R. 1406, it is the employer who has control over whether an
employee is paid in overtime wages or is provided comp time.
Despite language paying lip service to flexibility for workers,
there is no actual guarantee that a worker will ever be
permitted to take the comp time when she wishes to access it.
Instead, an employer is permitted to deny a worker's request
for comp time if it ``unduly disrupts the operations of the
employer.'' Moreover, case law interpreting similar comp time
language in the public sector indicates that an employer need
not give the employee the specific day off requested, even if
that specific day off would not have been unduly disruptive.
Rather than increasing a worker's control over her life, this
legislation increases the employer's control over the worker's
life.
Ostensibly, H.R. 1406 provides workers with the choice
between comp time and overtime pay. However, this bill gives
employers control over who has access to overtime wages and
comp time. Because providing comp time off is cheaper for an
employer than paying the overtime premium, the bill creates an
incentive for employers to preferentially assign overtime to
workers who elect to receive comp time in lieu of overtime.
Nothing in H.R. 1406 prohibits this. Workers who choose not to
receive comp time in lieu of overtime pay could be penalized
with fewer scheduled work hours and loss of overtime work.
Hourly workers in a struggling economy are often desperate to
keep their jobs; if they understand that their employers prefer
comp time arrangements, they may feel as if they have no choice
but to give up earned overtime pay in exchange for comp time.
As a result, workers whose families most rely on overtime pay
could struggle to make ends meet because they would lose access
to a vital source of extra income. H.R. 1406's enforcement
provision does not provide a remedy for such violations.
H.R. 1406 would further undermine enforcement of overtime laws
This bill would greatly increase the complexity of
enforcing overtime protections by making it more difficult for
DOL to determine whether an overtime violation has occurred
when an employer asserts that comp time was granted in lieu of
overtime pay. The bill does not provide any additional
resources to the Department of Labor in order to ensure
compliance. Currently, the enforcement capabilities of the Wage
and Hour Division are stretched thin, with only about 1,000
inspectors who regulate a labor force of over 150 million
people. Adding additional complexity to the process without
providing additional resources is a recipe for rampant under-
enforcement.
Furthermore, H.R. 1406 does not include meaningful
penalties for employers who fail to comply with the legislation
and does nothing to protect a worker who is discriminated
against for choosing not to work for comp time. As a result, an
employer could deny payment of overtime, deny a worker access
to earned comp time, fire a worker for refusing to work for
comp time and would only be liable for the amount of
compensation he failed to pay and an amount equal to those
wages as liquidated damages. A worker who is fired for refusing
to agree to a comp time arrangement would have no right of
reinstatement--and no unpaid accrued comp time from which to
calculate any damages.
THE MAJORITY'S FLAWED PUBLIC-SECTOR ARGUMENT
Proponents of H.R. 1406 argue that the legislation simply
provides flexibility already available in the public sector to
private sector workers. However, state and municipal employees
only became eligible for comp time versus overtime as a cost-
saving policy that afforded employers the value of their
employees' labor without being required to pay for it. At the
same time, public sector workers generally enjoy many more
employment protections than their private sector counterparts.
As a result, public sector workers, who are also more likely to
have union representation, are in a far more secure position to
be able to negotiate equitable comp time arrangements. H.R.
1406 extends all the benefits of employer-controlled comp time
arrangements to private sector employers, yet makes no effort
to engender job protection parity for private sector workers.
LEGISLATION THAT WORKING FAMILIES REALLY NEED
Workers depend on the wage and overtime protections in the
FLSA. They should not have to sacrifice earned wages to have
more time off from work. Nothing in the Working Families
Flexibility Act improves wage protections or promotes workplace
flexibility. There are many Democratic proposals that the
Committee ought to consider that would increase workers' wages
and improve working conditions.
Working families need a raise--raise the minimum wage
H.R. 1010 will raise the federal minimum wage to $10.10 by
2015, in three 95 cent increments. It will adjust the minimum
wage each year to keep pace with the rising cost of living
starting 2016. It will also raise the minimum wage for tipped
workers--which has been frozen at a meager $2.13 per hour for
more than twenty years--to 70% of the minimum wage. A majority
of workers' rights organizations enthusiastically support this
bill, including: AFL-CIO, SEIU, National Partnership for Women
and Families, National Employment Law Project, National Women's
Law Center, NAACP, and the National Disability Rights Network.
Working families need equal pay
The Paycheck Fairness Act would address discriminatory pay
practices, an important source of the wage gap. Women working
full-time, year-round are paid 77 cents for every dollar paid
to their male counterparts, translating into over $10,000 less
per year in median earnings.\28\ This bill builds upon the
landmark Equal Pay Act signed into law in 1963 by closing
loopholes that have kept it from achieving its goal of equal
pay. The bill would require employers to show pay disparity is
truly related to job-performance--not gender. It prohibits
employer retaliation for sharing salary information with
coworkers. Under current law employers can sue and punish
employees for sharing such information. In addition, it
strengthens remedies for pay discrimination by increasing
compensation women can seek, allowing them to not only seek
back pay, but also punitive damages for pay discrimination.
This bill is supported by many workers' rights organizations,
such as the AFL-CIO, ACLU, National Partnership for Women and
Families, and the National Women's Law Center.
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\28\National Women's Law Center. ``FAQ About the Wage Gap''
(September 2012). Available at http://www.nwlc.org/sites/default/files/
pdfs/wage_gap_faqs_sept_2012.pdf
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Working families need paid sick leave
The Healthy Families Act would allow workers to earn paid
sick leave to use when they are sick, to care for a sick family
member, to obtain preventive care, or to address the impacts of
domestic violence. Workers would earn one hour of paid sick
time for every 30 hours worked. Employers that already provide
paid sick time will not have to change their current policies,
as long as their existing time can be used for the same
purposes. Employers can also require workers to provide
documentation supporting any request for leave longer than
three consecutive days. This bill would let 30 million more
workers earn paid sick days, expanding access to 90 percent of
the workforce.\29\ Hundreds of state and national organizations
support this bill, including: AFL-CIO, ACLU, SEIU, NAACP,
National Women's Law Center, National Employment Law Project,
National Partnership for Women and Families, The Partnership
for Working Families, 9 to 5--National Association for Working
Women, and American Rights at Work.
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\29\National Partnership for Women and Families (March 2013) citing
to Joint Economic Committee of the U.S. Congress (March 2010).
``Expanding Access to Paid Sick Leave: The Impact of the Healthy
Families Act on America's Workers.'' Available at http://
jec.senate.gov/public/index.cfm?a-Files.Serve&File_id-abf8aca7-6b94-
4152-b720-2d8d04b81ed6
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During the markup of H.R. 1406, Rep. Courtney offered the
Healthy Families Act as a substitute amendment. Unfortunately,
Committee Republicans voted unanimously to block consideration
of this amendment.
Working families need paid family & medical leave
Congress expanded the Family Medical Leave Act to provide
greater protections for active duty service members, military
caregivers, and family members of service members and covered
veterans. Several other bills have been introduced to expand
and improve the reach of the Family Medical Leave Act including
the number of employers covered, types of circumstances covered
and increased access to paid leave.
Expanding the coverage of FMLA is an important step but
Congress must also ensure workers have access to paid family
and medical leave. Only 11 percent of workers in the U.S. have
access to paid family leave through their employers. We must
expand work-family policies to include wage replacement when
workers must take time away from work to address their own
serious health condition, care for a family member with a
serious health condition, or care for a newborn or newly
adopted child. Currently, the states of California and New
Jersey provide paid family leave through their temporary
disability insurance systems. Congress should build upon this
model and move to a national commitment to paid family &
medical leave.
George Miller, Senior Democratic
Member.
Gregorio Kilili Camacho Sablan.
Frederica S. Wilson.
Dave Loebsack.
Robert C. Scott.
Carolyn McCarthy.
John F. Tierney.
Robert E. Andrews.
Suzanne Bonamici.
Timothy H. Bishop.
Raul M. Grijalva.
Susan A. Davis.
Jared Polis.
Rush Holt.
Joe Courtney.
Ruben Hinojosa.
John A. Yarmuth.