button Vol. 7
No. 3


Overtime Is About to Change
line New Frontiers in Harassment
line Reminiscing About Workplace Romance
line Web Surfing at Work
line NLRB Using The Web
line Briefs

Braun Consulting News
News on Personnel, Labor Relations and Benefits

See our Archive Pages for Back Issues of Braun Consulting News!

Human Resources and labor relations Overtime Is About to Change.

"Family Time Flexibility Act" (H.R. 1119)

Graphic  A Brief History of the FLSA
Graphic  A Brief History of H.R. 1119
Graphic  A Sampling of the Numbers
Graphic  Main Provisions of the Proposed Changes
Graphic  Two Views on the Impact of the Proposed Changes
Graphic  Conclusions
Graphic  Links to Text of Two Versions of HR 1119


The world of overtime is about to go through some changes.

Though no laws have been changed YET, the writing is on the wall.

Proposed changes to the Fair Labor Standards Act (FLSA), in the form of the "Family Time Flexibility Act" (H.R. 1119), were published in the Federal Register on March 31, 2003. After considering a 90-day comment period ending June 30th, the DOL is expected to issue final revised regulations next winter.

As usual, there seems to be a wide disparity between interpretations about how these proposed changes to the FLSA law would affect workers and employers.

There is the "Pro Labor / Union" view, versus the "Pro Business / Employer" view.

We will discuss and compare those differences of interpretation throughout this article.

Checkmark Graphic A Brief History of the FLSA

The Fair Labor Standards Act was passed in 1935 as part of Franklin D. Roosevelt's ''New Deal'', and enacted in 1938. The act regulates minimum wage and overtime pay, mandating that all non-exempt employees be paid 1 ½ times their hourly rate for each hour worked in excess of 40 hours in a given work week. The FLSA does not require overtime pay for work on Saturdays, Sundays, holidays, or regular days of rest.

Very little has changed over the last 65 years regarding the basic provisions of this Act.

Pro Labor feels that it is not a good idea to change something that is set as a foundation for protecting employees from abuses of forced overtime.

Pro Business feels that the Act is long overdue for a change - to meet with the dramatic changes in the workplace and workforce that have taken place over those many years.

Checkmark Graphic A Brief History of H.R. 1119

The House bill H.R. 1119, entitled "The Family Time Flexibility Act", was introduced by Rep. Judy Biggert (R-Ill.) in March 2003. On April 9, it was voted out of the House Education and the Workforce Committee by a vote of 27-22.

Rep. Biggert is the Vice Chair of the Education and Workforce Subcommittee on Workforce Protections, which has jurisdiction over wage and hour matters.

She states that: "The law governing the private sector workforce has been frozen for more than 60 years, locked in a time when women worked in the home, most families had only one wage earner, and nobody went to kids' soccer games. Times have changed, families have changed, and the workplace has changed. Yet the law has not changed."

Checkmark Graphic A Sampling of the Numbers

- According to the AFL-CIO an estimated 80 million US employees - about 20 percent of the work force - were covered by the overtime rule in 1999.

- The DOL estimates that a total of 12 million workers would gain eligibility for overtime pay under the new rules.

- The proposed regulations would give an estimated 1.3 million additional low-wage workers overtime protections.

- More than 6.5 million businesses with 110 million workers may be impacted.

- The GAO (General Accounting Office) reports that close to 45% of exempt employees worked more than 40 hours per week in 1998. By contrast, only 19% of employees eligible for overtime payments worked extra hours.

- H.R. 1119 has 77 cosponsors and is supported by President Bush.

Checkmark Graphic Main Provisions of the Proposed Changes

A major proposed change is the increase in the salary threshold below which workers would automatically qualify for overtime - from the current $155 per week to $425 per week.

In addition, the proposed regulations attempt to simplify exemptions under the executive, administrative, and "learned professional" employee categories. (See details below.)

The "long" and "short" tests will no longer exist for determining status. "Simplified" tests for each exemption will be created that focus on "primary responsibilities". Employers will no longer have to calculate whether an employee spends 20 percent of his or her time on a certain task.

Rules on deductions from pay basically remain the same (partial day deductions are not allowed from exempt salaries in most cases), but full day deductions may now be made for instances of discipline, workplace violence and sexual harassment.

Employers would first have to decide whether to offer compensatory time and employees would then have the option of receiving overtime pay or taking compensatory time instead. The comp time agreement between the employer and employee would have to be in writing and could not be made a condition of employment.

The bill is not mandatory for anyone. The employer need not opt to offer family time, and the employee need not opt to take family time.

Under the House bill, employees must have at least 1,000 hours of continuous employment for the employer over a 12-month period before becoming eligible for the compensatory time off option.

Employees could accrue up to 160 hours of compensatory time each year and employers would be required to "cash out" unused comp time once a year.

A special new section has been proposed specifically for foodservice and retail establishments. It states that managers and assistant managers are "executives" exempt from overtime pay.


Graphic  More Details on "Exempt" Classifications

- The proposed rules explain how to identify executive, administrative, professional, outside sales, and computer employees:

    Executive employees
    --Primary duty is managing the enterprise, a department, or subdivision.
    --Customarily and regularly direct the work of two or more employees.
    --Authority to hire or terminate employees.

    Administrative employees
    --Primary duty is performing office or non-manual work directly related to the management or general operations of the employer or its customers.
    --Holds a "position of responsibility," which involves either performing work of substantial importance or work requiring a high level of skill or training.

    Professional employees
    --Primary duty is performing office or non-manual work requiring knowledge in an advanced field of learning or work requiring invention, imagination, or talent in a field of artistic endeavor.

    Outside sales
    --Primary duty is making sales or obtaining orders/contracts.
    --Customarily and regularly work away from employer's place of business.

    Computer employees
    --Primary duty involves system analysis techniques and procedures, design and development of computer systems or programs, or any combination of these responsibilities.


Checkmark Graphic Two Views on the Impact of the Proposed Changes

The same set of rules and two dramatically different interpretations of their effect - that is a typical situation in the world of HR and Labor Relations.

Here we will present some aspects of the disparity between the positions on the potential impact of the "Family Time Flexibility Act":


The business community in general feels that the bill would afford workers greater flexibility in setting work schedules, allowing them to better meet personal and family obligations.

Sponsor Rep. Biggert asserts that the bill be would entirely voluntary for employees and would have no impact on the traditional 40-hour workweek. Biggert claims that "This bill does not have anything whatsoever to do with the Labor Department's proposed regulations on expanded coverage of the overtime laws."

"This is a balanced bill that offers more choices for employees, and another option for employers who want to make their employees happy," said Biggert.

Supporters also point to the "success" of the comp time concept as it applies to the public sector.

"Workers in federal, state and local governments have been allowed to use flexible work schedules for nearly 30 years," said Biggert. "Federal workers use it and like it. Police officers use it and like it. Park District workers use it and like it. This bill gives employees choice and flexibility - and that is what they want."

Management groups have generally welcomed the proposed changes, which they feel replace outdated job descriptions and salary levels requiring overtime pay for already highly paid professionals.

DOL asserts that the changes will simplify the rules for employers.

A few examples of supporters of the bill:

U.S. Chamber of Commerce: "Family time, sometimes referred to as compensatory time, is a simple, common sense solution to provide additional flexibility to help employees balance work and time for family or other personal needs."

SHRM: "The Society for Human Resource Management (SHRM) today applauds the Department of Labor's (DOL) initial efforts to clarify the Fair Labor Standards Act (FLSA) and its regulations regarding exempt employees." March 27, 2003

SHRM Governmental Affairs Department: "The FLSA is in need of substantial legislative and regulatory reform to allow employers and employees greater flexibility in order to meet the demands of the 21st Century workforce."

The purported advantages are: (quoted directly)

* Providing hourly employees with the opportunity to choose paid time off in lieu of overtime compensation is a proven recruitment and retention tool that should be made available to private sector employers.

* Under the House and Senate bills, employees could accrue up to 160 hours of compensatory time off each year. The employer is then required to "cash out" any unused "comp time" by January 31st of the following year.

* Employees may utilize accrued compensatory time off within a reasonable time upon making a request as long as it does not unduly disrupt the operations of the business (same standard as the public sector).

* Employers are prohibited from directing employees' "comp time" use at their convenience. The legislation strictly prohibits this action. Employees are entitled to utilize their banked "comp time" under any circumstance unless the employer is able to claim a business necessity in denying its use.

* Employees' value increased flexibility during the workweek to balance work and family. Compensatory time off and biweekly work schedules offer a win-win situation and should be passed by Congress.

End quote.


Many democrats view the legislation as a way for employers to skirt federally mandated overtime pay requirements.

Organized labor groups like the AFL-CIO fear that amending the FLSA puts federal wage and hour protections at risk.

Unions maintain that the existing overtime regulations are not confusing. They also say that overtime pay should not be limited to low-wage workers.

Opponents assert that the bill is flawed because it puts decisions about time off in the hands of employers.

In addition, comp time would not have to be granted until just over a year later. The Economic Policy Institute (EPI) explained in a recent report that under this bill employers would essentially "take out an interest-free loan from their employees". This is because they may not have to exchange time off later for overtime hours worked now - up to over a year later.

"It's a massive give-away for employers at the expense of workers," said Nick Clark, assistant general counsel of the United Food and Commercial Workers in Washington, D.C

Unions and employee advocates also fear that the proposals would lead to longer work weeks and lower pay because the existing overtime law establishes a monetary disincentive to discourage employers from working their employees more than 40 hours a week. They feel that this disincentive would be seriously eroded by the proposed changes.

Kelly Ross, a legislative representative for the AFL-CIO states: "Employers see overtime as a cash flow problem. But overtime was designed to discourage employers from requiring excessive hours. Take it away and you take away the disincentive, resulting in more work hours, less flexibility for employees, and less time with their families.''

UAW (United Auto Workers) states: "By removing the monetary disincentive in the FLSA, H.R. 1119 would inevitably lead to an increase in the number of hours worked by American workers. The 40-hour workweek would erode. Thousands of jobs would be lost as employers require employees to work more overtime instead of hiring additional employees. This job loss would be exacerbated as honest employers who continue to pay cash overtime to their workers would be undercut by unscrupulous companies that abuse comp time to reduce their costs."

In addition, opponents state that H.R. 1119 does nothing to address the problem of mandatory overtime. In fact, by making it possible for employers not to pay for overtime and instead offer comp time at some later date convenient for the employer, they feel that this bill provides an incentive to require workers to work longer hours on the job.

As for the claim of the bill's supporters that there is more flexibility offered workers by the new bill, opponents' point out that nothing stops employers from offering flexible schedules right now. They state that workers who don't need overtime pay can bank that and take unpaid time later off when they need it - paid for by the extra cash they put away. In fact, for opponents to this bill the perceived failure of employers to take advantage of the flexibility already available to them calls into serious question the real motivation for the push to substitute comp time for overtime pay.

A few examples of opponents of the bill:

NOW: "The National Organization for Women opposes this legislation as a serious step backwards in protecting worker rights and harming women and their families."

UAW: "The UAW strongly urges you to oppose this Comp Time legislation."

AFL-CIO: "The bill undermines the basic, family-friendly protections of the Fair Labor Standards Act (FLSA), on which millions of women depend for flexibility in pay and time off. Linda Chavez-Thompson, Executive Vice President of the AFL-CIO, joined Rep. Slaughter to highlight the bill's detrimental effects on women workers."

Checkmark Graphic Conclusions

The rules governing overtime pay are in a state of flux now. Changes will be made, and they will have a big impact on a large number of businesses in this country.

Business owners will have to review all the duties and classifications of every employee to stay in compliance with the FSLA or they could suffer huge litigation costs and awards in the future. An employee who was exempt under the old rules may not be under the new ones and vice versa.

These changes are not expected to take effect until 2004, but they will be coming.

We will keep you abreast of the latest developments as usual. If you have any questions about overtime or the FLSA, just give us a call at Braun Consulting Group. We can help you.

As always is the case once the bill becomes law the Department of Labor will take over and issue Regulations. The real test of our ability to assimilate this new law will come once the DOL does its work issuing the regs. and the inevitable "interpretations with Q&A fact sheets".

To my clients and friends I can only advise - STAY TUNED as there is a lot more to come. Don't succumb to the temptation to overhaul all of your policies and job descriptions just yet! If you have specific questions send an email or give us a call.

Checkmark Graphic Links to Text of Two Versions of HR 1119

Family Time Flexibility Act (Introduced in House)

HR 1119 IH

Family Time Flexibility Act (Reported in House)

HR 1119 RH

2. New Frontiers of Harassment Next Page

The Contents of this News Letter are intended for general information
and should not be construed as legal advise or opinion.
Click Here to view our Web Site Disclaimer Page.

button *  INSIDE   * HOME  * ARCHIVES
Braun Consulting Group
* Insurance * Labor * Personnel

1326 5th Ave, Suite 339 / Seattle, WA 98101
Contact Braun-BCG

Site by - AJ Consulting   © 2003 Braun Consulting Group