Employees May Receive Paid Time Off in Lieu of Overtime Pay

Recently, the U.S. House of Representatives passed a law that allows private-sector employers to allow employees to earn Paid Time Off (PTO) instead of overtime pay. H.R. 1180, the Working Families Flexibility Act of 2017, amends the Fair Labor Standards Act of 1938. Under the act, an employee may receive “compensatory time off at a rate not less than one and one-half hours” for each hour of work that overtime pay is required. This means that, instead of receiving overtime pay in their next paycheck, an employee may earn PTO that they may use at a later date that is approved by the employer.

An employer may provide compensatory time in accordance with applicable provisions of a collective bargaining agreement between the employer and the labor organization that is recognized as the representative of the employees. If an employee is not represented by a labor union, he or she may establish a written or otherwise recorded agreement with their employer before they work over 40 hours in that pay period. The agreement can be established if the employer offers the employee the option to receive PTO instead of overtime pay and if the employee knowingly and voluntarily agrees to the terms and not as a condition of employment. Employees may be eligible for this agreement only if he or she worked at least 1,000 hours for their employer on a consistent basis during a 12-month employment period before the date of agreement or receipt of compensatory time.

An employee may only accrue up to 160 hours of PTO in lieu of overtime pay. The employee has until January 31 of the calendar year to use their compensatory time. If, at that time, the employee does not use their compensatory time, their employer must provide compensation at their overtime rate for any leftover accrued time. An employer may designate a 12-month period other than the calendar year, but he or she must communicate to the employee when that period starts and ends. In this case, compensation will need to be provided to the employee no later than 31 days after the end of that 12-month period. For employers who adopt the policy, they may choose to discontinue it after they give their workers a 30-day notice.

Under the act, employers are forbidden from directly or indirectly intimidating, threatening, or coercing their employees for the purpose of requiring them to use their compensatory time or to interfere with their rights to request or not request PTO instead of overtime pay. Employees cannot be turned down for a job or terminated if he or she refuses to participate in the adopted policy. Employees may opt out of the policy at any time, as it is not a condition of employment.

If an employee is voluntarily or involuntarily terminated, the employer must pay the employee for any unused compensatory time at the overtime rate that he or she earned when time was accrued or at the time he or she received payment of such compensation, depending on which is higher. Employers who violate the terms of the act may be held liable for the amount of the rate of compensation for each hour of compensatory time accrued 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.”

Navigating the complexities of employment law can be difficult. For this reason, it is important that those facing an employment financial dispute seek the guidance of an experienced attorney. Steven Mitchell Sack, “The Employee’s Lawyer,” has considerable experience representing clients in New York employment financial disputes, including employee wage and hour matters. With two law offices conveniently located in New York City and East Meadow, New York, the Mr. Sack is available to assist New York City and Long Island residents with their employment law issues. For more information or to schedule a consultation, contact Steven Sack at (917) 371-8000.