Employers Get Ready - Overtime Pay Rules Will Change Soon

On May 2, 2017, the U.S. House of Representatives passed H.R. 1180, also known as the Working Families Flexibility Act of 2017 (the “Act”).  The Act amends the overtime pay rules of the Fair Labor Standards Act to provide greater flexibility for both employers and employees.[1]  The Act has already garnered support from the White House and President Trump is expected to sign the bill into law if it passes in the Senate.[2]

Employers should get ready soon because if passed, the Act has the potential to drastically shift the way private sector employers currently do business.  Instead of paying nonexempt workers who work more than forty (40) hours per week the overtime wage of time-and-a-half, companies would be able to give workers a choice of receiving paid time off (“PTO”) for overtime hours worked.  Therefore, this Act would provide employers with greater flexibility in managing their businesses and workers.

Under this Act, employees can accrue up to 160 PTO hours per year and take the PTO as long as it would not be unduly disruptive to the employer’s business.  Furthermore, employers must pay out in cash any unused PTO hours at the end of the year, or at the termination of the worker’s employment with the company.

Due to the various new worker protections included in this Act, however, employers are strongly advised to seek legal counsel in order to ensure strict compliance.  For example, employers who violate the provisions of the Act would be required to pay the worker double the amount of wages owed.  In addition, the Act would require employers who offer workers the PTO option to enter into a written agreement with the employee.  As such, in order to explore how this Act would impact your business and maximize the potential benefits of this Act once enacted, please contact an experienced labor and employment attorney.

[1] Working Families Flexibility Act of 2017, H.R. 1180, 1115th Cong. (2017).

[2] Press Release, The White House, Statement of Administration Policy (May 2, 2017), available at https://www.whitehouse.gov/the-press-office/2017/05/02/hr-1180-%E2%80%93-working-families-flexibility-act-2017-rep-roby-r-al-and-17 (last visited May 4, 2017).

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