=============

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":

1. PRO BUSINESS / EMPLOYER

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Management groups have generally welcomed the proposed changes, which they feel replace outdated job descriptions and salary levels requiring overtime pay for already highly paid professionals.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

2. PRO LABOR / UNION

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."

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.

 

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)