New overtime rule passes the house

Employees who work overtime may have new options as a result of the Working Families Flexibility Act which was passed by the House of Representatives 229-197 on May 2, 2017.

If it passes the Senate, the bill could give hourly and salaried nonexempt workers the option to take paid time off for overtime hours worked or be paid at time-and-a-half.

If a private sector employer decides to offer this new option, and workers choose comp time but later change their minds, they could have the option of "cashing out," and the employer could be required to pay overtime within 30 days.

Proponents say that accruing extra hours off through the comp time option, which could become available once an employee has worked 1,000 hours for an employer, may provide workers with more flexibility and control of their time. Opponents of the bill fear that the protections don't go far enough, citing a concern that employees may feel pressure from employers to opt for comp time. In addition, opponents feel there isn't enough assurance in the bill that workers will be able to take the comp time when they need it.

Comp time option could provide workers with choice and protections

The new ruling could likely impact more "blue collar" industries or those who have employees in more service-oriented roles such as restaurants or health care. The Society for Human Resource Management (SHRM) outlined the following worker protections the bill could provide:

• Allows employers to offer employees a choice between cash wages and accruing comp time for overtime hours worked.

• Requires the employer and the employee to complete a written agreement to use comp time, entered into knowingly and voluntarily by the employee.

• Retains all existing employee protections in current law, including the 40-hour workweek and overtime compensation accrual requirements.

• Allows employees to accrue up to 160 hours of comp time each year. An employer could be required to pay cash wages for any unused time at the end of the year. Workers could be free to "cash out" their accrued comp time whenever they choose to do so.

• Prohibits employers from intimidating, coercing or forcing employees to accept comp time instead of cash wages. Violators could have to pay employees double the amount of wages owed.

• Requires the nonpartisan Government Accountability Office to report to Congress on the extent private sector employers and employees are using comp time, as well as the number of complaints filed with and enforcement actions taken by the U.S. Department of Labor.

The White House is currently in favor of the bill as it stands, stating that it would extend to private sector workers a choice that public sector employees have long enjoyed.

What's next?

The House bill passed largely along party lines, with no Democrats voting for it. It has moved to the Senate as S 801 and been referred to the Committee on Health, Education, Labor, and Pensions. Republicans will need eight Democrats to vote in favor of the legislation to avoid a filibuster.

If the bill were enacted by the Senate, businesses might be impacted by additional staffing needs, since more employees might be needed to cover those who choose to use the comp time option. Additionally, businesses might also want to review how the number of hours worked or how potential comp time use would be documented.

For now, businesses should take a "wait and see" approach to this legislation. However, it's important to keep an eye on this bill since it has the potential to impact your bottom line and employee relations.

Disclaimer: The information in this article has been obtained from sources deemed reliable; however, we do not guarantee its accuracy. This information is not intended to be legal, investment or tax advice and should not be relied upon. MB Financial Bank, N.A. and its affiliates do not provide legal or tax advice to clients. You should review your particular circumstances with your legal and tax advisers. Member FDIC.

• Michael Smith is commercial group president with MB Financial. Contact him at michael.smith@mbfinancial.com.