Ever play the game telephone? It’s a game in which one person whispers something into the ear of the next person, and that person is supposed to whisper the same thing into the ear of the next person, and so on. When the group gets to the last person, he or she is supposed to tell the group what was said. Invariably, the final statement is completely different from the initial one. The same thing often happens with respect to people’s understanding of the law – specifically workplace or employment law.
This blog series is meant to address some of the common misconceptions about employment law that float around, and correct any misunderstandings. For the most part, there’s nothing very new about the issues in this series. However, most employment lawyers have heard friends in casual conversation or clients make inaccurate statements about employment law. These misunderstandings can often lead clients into trouble.
Employment Myth #1: “My company’s employees worked around the clock last week, so the company is going to give the employees comp time as a reward.”
Compensatory or “comp” time is leave granted to a non-exempt employee, which accrues at the rate of one and a half hours per hour of overtime worked. Non-exempt employees are entitled to receive overtime pay, while exempt employees are not. While public employers can provide a certain amount of comp time to employees rather than paying out overtime pay under certain conditions pursuant to the Fair Labor Standards Act (FLSA), the Act currently prohibits private employers from doing so.
In the 2013-14 Congress, the House of Representatives passed H.B. 1604, entitled “Working Families Flexibility Act of 2013,” which would amend the FLSA to allow private employers to provide compensatory time off to employees in lieu of paying overtime under certain conditions. H.R. 1604 was then introduced in the Senate and referred to the Senate Committee on Health, Education, Labor and Pensions. Generally speaking, the proposed legislation would have allowed private employers to provide comp time to a union employee under a collective bargaining agreement or to a non-union employee under an agreement that the employee voluntarily entered into with the employer before performing the work.
For now, private employers must compensate non-exempt employees with overtime pay for each hour employees work in excess of 40 in a given work week. Should a private employer wish to provide leave to an exempt employee as a reward for working extraordinary hours, the employer may do so because there is no requirement to provide overtime for exempt employees anyway. However, there are two important caveats: 1) as always, ensure that your employees are properly classified as exempt employees under the FLSA; and 2), call the leave by a name other than “comp time” to avoid confusion.