The House of Representatives just passed U.S. H.R. 1180, a bill that could potentially give certain businesses and their employees more flexibility in federal overtime compensation. The Working Families Flexibility Act (WFFA) would allow employers to award workers compensatory (“comp”) time off, in place of overtime premium pay for hours worked over 40 in a week.
Under this bill, employers may choose to offer this option, and employees may decide if they would rather receive regular overtime pay or take compensatory time off at a later date. This “banked” comp time may be cashed out at a later date should the employee decide s/he would prefer to have monetary compensation rather than the time.
From an employer perspective, this could result in significant savings in operational costs, though it could be more challenging in the administrative sense. But for employers with staff in California, this bill would have little practical effect.
What Does H.R. 1180 Mean for California Employers?
First, there’s no word on whether or not the WFFA will pass the Senate. In the past, similar bills often cleared the House only to be killed on the Senate floor. (A more business-friendly political administration may mean greater possible success this time around, however.)
Second, and more importantly, state laws are clear regarding California overtime requirements. California employers are mandated to pay overtime at time-and-a half or double-time, depending on how many hours/days are worked.
CA overtime requirements are as follows:
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All hours worked in excess of 8 hours in a workday or 40 hours in a workweek are paid at the rate of one and one-half times the regular rate of pay.
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The first eight hours worked on the seventh consecutive day of work in the workweek are paid at the rate of one and one-half times the regular rate of pay.
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Hours worked in excess of 12 in any one workday and hours worked in excess of 8 on the seventh consecutive day of the workweek are compensated at a rate of two times the regular rate of pay.
Employers should ensure they have clear, written policies regarding overtime compensation. For example, all employees should be aware (preferably via an Employee Handbook outlining company policy) that:
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Overtime hours must be approved in advance by supervisors.
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Unauthorized overtime will be paid, but could result in discipline or even termination.
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Hours worked on weekends do no automatically count as overtime.
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Sick, vacation, holiday or other paid time off cannot be used to calculate overtime compensation (unless your “company” is the Los Angeles Fire Department!).
