Typically, when a worker puts in overtime, he or she will be paid time and a half for the work performed over 40 hours in a week. Recently, legislators in the U.S. House of Representatives introduced a bill that would change how employees can be paid for overtime work.
The bill - referred to as the Working Families Flexibility Act - would allow employers to compensate employees for overtime through time off. Instead of a worker receiving pay for 1.5 hours of work for every overtime hour worked, he or she would receive 1.5 hours of time off for every overtime hour. The bill provides that employees could earn up to 160 hours of additional time off annually.
Under the bill, both the employer and employee would have to agree to compensate overtime with time off, rather than monetarily. In addition, employees who earned additional time off would be required to use the time within a one-year period. If they did not use the time off during the year, the employer would then be required to pay for the overtime within one month.
Since the bill was introduced, legislators have voiced their support and opposition. Those in favor of the bill suggest that it provides workers with added flexibility, as they could take extra time off during the year after working overtime hours. Opponents of the bill disagree with that assertion. Instead, they contend that the bill acts as an "interest-free loan," as workers may not be compensated for the extra hours worked until a year has passed since the work was actually performed.
Source: Thomson Reuters, "Proposed legislation would extend comp time to private sector," Amanda Becker, April 12, 2013.