Overview: Overtime Changes

Earlier this month, Congress passed a law that will change how employers handle overtime. The Working Families Flexibility Act makes changes to overtime compensation. Although not yet passed by the Senate, we know the details of the bill, and how it could impact you. The new law focuses on private employers. It amends the legal requirements for compensating employees. Now, rather than allowing for overtime pay only, the new bill allows employers to provide compensation  in the form of paid time off. If the bill becomes law, it will mean employers will have new options for handling their employees’ overtime.

What are the details?

Currently, the law requires employers to compensate employees who work overtime in the form of overtime wages. The new bill would change the requirements, allowing employers the option to give overtime compensation either as wages or as paid time off. The new bill sets the ratio for paid time off as 1.5 hours of paid time off for every 1 hour worked. Further restrictions for this new compensation exist. An employee would have to have worked a total of over 1,000 hours, and been employed for at least 12 months to be eligible. Both employees and the employer would also have to agree to this compensation. Employers also can’t coerce employees into such an agreement. Finally, employees must use any time off accrued by the end of the year. At the end of the year, the employer must pay the employee for the balance of time.

What do you need to do?

Currently, the Working Families Flexibility Act is not law. It still needs to go to the Senate for debate and approval. If the bill does become law, it means that private employers may need to rethink their current policies. Benefits packages are an important way to attract and maintain employees. Your overtime policy is another part of your benefit package. If you have questions about how the new bill, or other questions regarding you benefits package, please reach out to us. We can be reached by phone at 800-484-2199, or by email at info@morganplan.com.