A coalition letter from free-market advocates urged lawmakers Wednesday to support a bill that is designed to provide employees flexibility in how they get compensated for overtime.
The Working Families Flexibility Act would reform federal law governing overtime pay. The bill would allow employees to choose paid time off instead of cash when working overtime. Critics fear it could undermine overtime protections. The Competitive Enterprise Institute (CEI) is leading the coalition letter in support of the bill.
“The legislation is a positive step toward allowing employers to offer flexible work arrangements that make it easier for workers to achieve a better work-life balance,” the letter states. “With this legislation, a worker could choose to receive paid comp time in lieu of overtime wages if the employer agrees.”
The letter was signed by roughly a dozen free-market advocacy groups. Americans for Prosperity, Americans for Tax Reform, the Center for Worker Freedom, FreedomWorks, the National Taxpayers Union, and the R Street Institute were among those that signed the letter.
The Fair Labor Standards Act (FLSA) currently doesn’t allow such an arrangement, even if both the employer and employee prefer it. The Economic Policy Institute (EPI), a progressive research nonprofit, and other critics argue the bill is more beneficial to employers than their workers.
“The legislation does not create employee rights, rather it creates a new employer right – the right to delay paying any wages for overtime work for as long as 13 months,” EPI stated on its website May 2. “The legislation forces workers to compromise their paychecks for the possibility – but not the guarantee – that they will get time off from work when they need it.”
The coalition letter argues the criticism doesn’t reflect what the bill actually does. The bill would first allow employers to offer employees paid time off instead of overtime pay. Employees would then have to choose whether to take the time off or get traditional overtime pay.
“Contrary to some criticisms of the bill, the choice to offer comp time as an alternative to overtime pay is completely up to the employer; and the choice to accept it is completely up to the employee,” the letter states. “In addition, employees would be able to cash in their comp time during the year and employers would be required to pay employees for any unused comp time at the end of the year.”
The bill also subjects employers to penalties if they attempt to intimidate, threaten, or coerce any employee into taking paid time off instead of overtime pay. Both the employer and employee have to be in agreement. Additionally, both the overtime wages and time off would accrue at 1.5 times the overtime hours worked.
“This legislation empowers workers by giving them greater control of their own time and how they are compensated,” the letter states. “Some workers may prefer to receive overtime pay, while others, especially workers juggling hectic family schedules, may want to accrue more paid time off to spend with their families.”
The letter does point to an earlier example of how the policy was deployed. Congress amended the FLSA in 1985 to give government employees the option to receive paid time off instead of overtime pay. The proposed bill would extend that option to the private-sector.
House Republicans successfully passed the bill May 2. It is now being considered by the Senate.
