Comp Time Instead of OT

IT HR

Did you see that a Representative from Washington State has proposed the Family-Friendly Workplace Act (H.R. 6025) that would amend FLSA law to allow private companies to offer comp time instead of paying OT.  Here are my first thoughts on this.  I would be curious to see what all of you think. 

1. I think that there are a lot of employees that would like this.
2. I think this could possibly be an administrative nightmare for some companies
3. There are some employers that currently have policies (and some state law allows this) that says you lose any unused vacation when you leave.  Since you have "worked" this time already, I would think there is going to have to be something in the legislation that says that companies have to pay this time out no matter what their existing policy says.

 

efeldman

I agree that many employees would likely enjoy comp time, and that it could present an administrative challenge in industries where there are a great deal of non-exempt employees who are actually working overtime.  In answer to point #3, I would think because this is comp time and is given for hours already worked, it would not classify at all as vacation.  Therefore, comp time would always have to be paid out, either in compensation or time.

TXHRGuy

Depending on the Company's requirement to actually award the comp time as time off rather than OT pay, this could be a real problem in production environments where missing people can translate into missing out on big $.  I agree with EFeldman that comp time would not classify as vacation time although I think the way of the world is trending toward treating vacation time as earned compensation that has to be paid out and this could end up being the catalyst that pushes some states in that direction.  Washington state is 9th circuit and fairly protectionist to begin with.  I would also expect the comp time to be earned at 1.5 hours comp time for each OT hour worked.

IT HR

Ooopppss - I didn't mean to imply that comp time would be classified as vacation time. I was using vacation time as an example that some companies (where allowed by law) do not pay out for sick and vacation time that has not been used.  I think that they would have to pay this (comp time) out since it is basically time earned.  I do agree that there is a trend toward vacation time being classified as earned compensation and think that we will see more states get on this bandwagon.  Although in MD a court case last fall gave a recommendation that companies should handle unused vacation time as earned compensation and should pay it out.  The MD Wage and Hour took this recommendation and changed its documentation to say this. Employers went crazy and the MD Legislature passed emergency legislation saying that as long as employers have a policy that is discussed when an employee is first hired that the employer can follow the policy. 

HRforME

I see some potential issues:

(1) Owed payroll costs rise as wages rise. Since pay is usually at the current rate, this would be a larger liability than first expected.  Especially if you have an employee that banks quite a bit of comp time over the years.  Somehow, the employer would have to put this liability on their books and fund it for the future.  Because I do agree that it would be a mandatory payout even in states that don't currently require unused vacation time to be paid at termination.

(2) As it currently exists, I often seeing postings by employees who are not happy that their employee would not let them use the PTO whenever the employee wanted to (without notice, etc).  I see a comp bank adding to this problem as the employee could have that much more time to use.

I can't think that I would recommend my company allow this beyond a very basic program where if they worked OT this week, they could take the extra time next week or so.  So that it is at the same pay level (#1) and the timeoff is more controlled by the employer (#2)

 

 

 

TXHRGuy

I see point (2) as being even a bigger issue, now that you mention it, because it's not just earned PTO, it's the quid pro quo for not taking 1.5x time for the added work you did: it is, in the truest sense and in any state, earned and owed compensation.

 

I also agree that it would be way simpler to have and administer a comp time program if, at the time the OT hours are approved, the comp time is scheduled (with no takey backies) in the same or following week.

JEP123

I previously worked for the government in HR.  We had comp time.  You could only bank up to a set number of hours (I think it was 24, if I remember correctly) and it had to be used within 1 yr of when it was earned.  Anything over the set amount or at 1 yr + 1 day, the excess hours were automatically paid out as OT.  Using comp time fell under the same scheduling and approval rules as vaction requests.

HRforME

JEP...Sounds like your agency had a good control mechanism to keep abuse from happening.  Did the employees get to make a choice on whether they banked the first 24 hours?  If so, was tracking it hard?  I assume your payroll/timekeeping system was setup to do so and when OT was input, the system was able to classify it correctly.  If not, how much of a manual process was it?

I only have 25% non-exempt employees at one location (corporate), but the other location is 95% nonexempt.

I thought of another possibility for a 3rd issue.....

(3) Would implementing a comp time system for nonexempts cause issues for exempt employees who would then feel that they too should get comp time for hours over 40?   Hopefully the exempt employee is getting fairly paid and fairly benefited on PTO, but I could see it becoming an issue, especially for employers who use the exempt deductions to their advantage whenever they can (docking for a full day off for personal reasons once the exempt employee is out of PTO for example).

 

JEP123

There were timecard codes for comp time earned and comp time used.  Employees still needed prior approval to work comp time--just like the policy for overtime.  There was no choice about banking vs paying out.  1 hr comp time worked equaled 1 hr time off, but if the time was not used after 1 year and paid out, it paid at 1 1/2 x  So, supervisors used comp time as a tool to get the extra work/coverage and not spend the extra $'s.  Employees liked it if they valued extra time off more than the extra money.  Supervisors were responsible for the approval and trying to make sure that their employees took the comp time whenever possible.  Supervisors recieved monthly vacation/sick leave reports for their staff (which also included comp time) to assist them in managing the time.  This was all set up in the payroll/timekeeping system.  The program had a rule that changed the code from comp time to OT automatically after 1 year, so therefore it automatically paid out.