By: Lauren Shreve on May 5th, 2017

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Are you Ready for the Working Families Flexibility Act?

Risk Management | Benefits

Since revisions to the Fair Standard Labor Act’s (FSLA) overtime rule was stopped ten days prior to going into effect on December 1, 2016, overtime has been on the minds of employers. Many HR professionals, myself included, poured over reports of employees and salaries to see who would be pushed back into the hourly (non-exempt) classification and who would remain salaried.

Some employers had communicated and implemented new rates of pay or overtime eligibility ahead of the stated effective date and had already taken on the added administration and cost associated with the new salaries and having more employees eligible for overtime.

In these uncertain times, we can only guess if last year’s approved changes to FSLA will ever go into effect. And now, while we’re all focused on AHCA (The American Health Care Act) and potential changes to the H1B visa program and more, another law is introduced to impact payment of overtime. Welcome to the Working Families Flexibility Act (WFFA) and, oh, by the way, it just passed the House on May 2, 2017.

Are you ready for the WFFA? Do you know what it is?

The Working Families Flexibility Act introduced by House Representative Martha Roby of Alabama to provide the flexibility to workers to exchange overtime pay for paid-time off to be taken at a future date. While some see this as an extension of a practice already in place in the public work sector, others see this opening a Pandora's box which could lead to employees being coerced to give up their right to overtime pay in exchange for paid time off that they might not get to take.

Another flaw that I can see, is that eight hours of overtime equals 12 hours of pay, but only eight hours of paid-time-off – this isn’t exactly keeping the employee ‘whole.’ But this compensatory (comp) time off program would be a completely voluntary program for employees. In other words, if an employee would rather keep their overtime pay, they will make this election.

As an HR professional, I  know there is a great deal of confusion already about comp-time. Just about everyone has heard of it and knows what it is, but only public-sector workers are actually able to lawfully employ the scheme. And it really only works for non-exempt (hourly) employees as given the structure of exempt (salaried) employees pay, there is no earned overtime, so nothing to offset with compensatory time off-- though I wouldn’t be surprised if some workplaces try it for the exempt-class.

So for the many businesses who were burned by pro-actively implementing classification and salary changes to align to the new FSLA overtime pay guidelines – only to have it put on hold in October of 2016, the question is now how to plan for this change. The good news is that unlike the FLSA changes that increased employer costs, this WFFA (if enacted) could reduce costs to employers by offsetting overtime with paid time off and at a 50% savings.

I have read the offering of this program will not be mandatory for employers. If this is the case, I would advise employers and HR practitioners to meet with key stakeholders to decide if they plan to roll this out as a benefit, should it go into effect. And in this way management and HR will know how to address the inevitable questions to come from both exempt and non-exempt staff members if and when it passes and once the word gets out.