Business owner's are in the middle of an ever changing political landscape and have an uphill battle when it comes to keeping their business compliant with constantly evolving litigation. The Fair Labor And Standards Act (FLSA) is one law that is constantly changing, which can drastically effect businesses and how they operate.
Currently, FLSA requires all private sector employers to pay “non-exempt*”, (in most cases these are employees who are paid hourly) employees time-and-one-half their regular rate of pay for all hours worked over 40 hours in a given week.public employers at the federal, state, or local level to compensate non-exempt employees for hours worked in excess of 40 hours a week with compensatory time in lieu of cash overtime. These public employers must credit that compensatory time at the same rate as time-and-one-half their regular rate of pay. On the other hand, Section 207(o) of the FLSA allows non-exempt employees in the public sector to use compensatory time in lieu of cash for overtime, sometimes they use a small portion of the accrued balance (if you are thinking more administrative work for your HR department, you are correct). Currently, the only prerequisite needed for this employer-employee arrangement is that there be an expressly mutual agreement between employee and employer, and it may not be a condition of employment (currently the law provides that this agreement need not be a written contract, only a verifiable statement).
My advice, create an agreement that clearly states the arrangement and have both parties sign the document. Use either a collective bargaining agreement, memorandum of understanding, or some other agreement. Keep this contract (or a copy) in the employee's file.
This amendment, if passed, will now allow private-sector employees to choose, based upon a voluntary agreement with his or her employer, to have his or her overtime compensated with paid time off of up to 160 hours of compensatory time each year (public employers allow up to 240 hours of compensatory time or up to 480 hours for some jobs). This amendment will also provide that non-exempt employees in the private sector who choose time off in lieu of cash for overtime wages and have unused time in their "compensatory bank", that cash equivalent must be paid out either at the end of the year or at the end of employment with the employer (at a rate of time-and-one-half their regular rate of pay).
IMPORTANT: in order for the agreement in the private sector to be valid, the necessary requirements must be met:
1. An employee must have worked at least 1,000 hours in a period of continuous employment with the employer during the preceding 12-month period.
2. An agreement must be affirmed by a written or otherwise verifiable statement.
Overall, this amendment is aimed to benefit both the employer and employee. That is, it allows employees in the private sector more flexibility while allowing employers in the private sector to control time off (i.e. if there is a strict deadline that needs to be met, the needs of the business come first). This amendment will increase a business's administration tasks slightly, but these changes are not nearly as "burdensome" to employers as many new laws can be at times. Only time will tell what revisions will be made in the Senate, but it is looking as if this amendment is here to stay.
*Non-exempt employees may also include volunteers, trainees, interns, independent contractors, and temporary employees.