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New Overtime Bill Could Change Everything

Posted by Jeff Pelliccio on May 16, 2017 9:00:00 AM

In ICS insights

If your company pays overtime to hourly workers, you will certainly have an interest in the Working Families Flexibility Act. This bill just passed Congress on May, 2, according to CNN. While the U.S. Senate has not yet had the chance to vote on this bill, the news article suggested that it had White House support. Basically, the bill allows employers more flexibility to substitute compensated time away from work in exchange for overtime pay.

Proponents of this bill say it will give both employers and employees more flexibility. Employers may be able to offer compensated time off during slower periods, and employees may enjoy leave to attend to personal obligations. Opponents of the bill have concerns that it will allow employers to defer compensation and that employees may count on the extra pay. After you learn a little more about the way this new regulation will work, you may decide that it will offer your company and your employees more flexibility.

What is the New Overtime Bill?

Under current Department of Labor rules, employers have to pay eligible employees one and one-half of their typical hourly rate for any work they require or permit over a normal 40-hour week. The new rules would give an employer some flexibility to substitute one and one-half hour of compensated time off for the paid overtime.

You can read the full text of the current bill at Congress.gov. As the bill stands, employers would only be allowed to substitute leave for overtime pay in certain cases. These are some examples of exclusions:

  • The new overtime policy cannot conflict either with previous individual or certified labor union agreements. However, employees may be able to agree to accept compensated time instead of pay at their discretion even if they had a previous agreement for overtime pay.
  • Employees aren't allowed to offer to substitute compensated time off if the employee hasn't worked for them for at least 1,000 hours during twelve months of continuous employment.
  • Employees can only accrue a maximum of 160 hours of paid overtime before compensation.

For most companies, employees would either have to take their compensated time or get paid by January, 31st of the year after they worked their overtime. Some companies might specify a different twelve-month period as a calendar year. In this case, compensation has to be taken by the month that follows that customized period of twelve months.

For instance, some seasonal types of businesses might want to set a different calendar year. Companies that experience a peak season during the summer might want to create a custom year that ends after that peak season in the fall.

At ICS, We Can Make Payroll Simpler and More Flexible

The Working Families Flexibility Act, also known as HR 1180, has not become law yet. If it does pass into law, there may be some changes to the bill. If the bill becomes a law, you may decide to change how you compensate some employees for overtime work. It's possible that these more flexible rules could help both you and your employees. Of course, more flexibility often introduces more complexity into the way you manage payroll.

Some companies may decide to add more legal or compliance staff just to make sure they are compensating their employees in a fair and legal way. Many businesses choose to use your payroll services to help them save time while making sure that they pay employees in compliance with government regulations. At ICS, our payroll services can offer your company the support it needs to stay compliant with the law and offer flexible compensation to hourly employees.

You can learn more about ICS payroll services here. We also welcome your questions about the many ways that our payroll services can help your company manage changes and remain competitive.

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