Here’s a link: https://www.lee.senate.gov/2025/3/lee-introduces-the-working-families-flexibility-act-for-the-119th-congress
Senator Mike Lee (R-UT) has introduced the “Working Families Flexibility Act” to allow the private sector to offer comp time in lieu of overtime pay for full time employees – allowing them more flexibility in using their “overtime benefit”. Sounds pretty good, right? It’s optional, so companies don’t have to offer it but if they wanted to subject themselves to a bunch of extra work to do something they can already do, I guess that is up to them. Not very Lean though.
Mike’s Plan:
If a company offers the benefit, the employee opts in by signing an agreement that is retained by the company. But there are limits:
- Max of 160 comp time hours can be accrued (the equivalent of 106.67 hours of overtime worked).
- Employee must have worked 1000 hours in the previous 12 months on the day the agreement is signed.
- Companies have to pay it out as pay at the employee’s request within 30 days of the request.
- Must pay out any outstanding balance by 31 days after the designated year (calendar or other fiscal year) so it resets to 0 each year.
- Companies can pay the employees down to an 80-hour balance with 30 days notice.
- In non-union situations, company can discontinue the program with 30 days notice. Unions go by their contract.
- Employees can withdraw their personal agreement at any time.
- Comp time is paid out at termination.
- Comp time is paid out at the higher rate of the current pay rate or the employee’s wage rate when earned.
- The law has a five-year sunset period
So, lots of additional accounting to give this benefit. Oh, and what about the foregone time value of money for unpaid wages? I don’t know why any company would offer it.
Besides, here is a plan (AKA Dan’s Plan) that doesn’t require any additional accounting and only a little bit of tracking:
- In addition to earning and being paid for overtime at a minimum of 1.5x for each hour of overtime worked, the employee earns 3 points of comp time benefit. The company tracks comp time points and makes this information available to the employees. All monetary compensation earned is paid in the regular pay cycle so there is no accounting effort or liability created.
- An employee can accrue a maximum of 320 comp points (the points earned from working 106.67 hours of overtime). Obviously, this is an arbitrary number that a company can decide on without Mike Lee’s wisdom needed.
- An employee can use their comp points to request unpaid time off at a rate of 2 points/hour of time taken off.
- There is no penalty (attendance points) for taking unpaid comp time off (or you could call it “approved comp leave”) using comp points.
- The comp time account resets at the beginning of each year (it has no monetary value, just flexibility value so not really a requirement but consistent with Mike’s plan).
Benefits:
- No need for more federal oversight – companies can offer unpaid time off now with no penalty.
- Simple to track.
- No need to opt in or out. Everyone is in. Using comp time points is optional
- No new accounting requirements
- Employees are responsible for managing their own money.
- No time-value-of-money penalty
- Employees have additional flexibility in getting time off that they can manage on their own – this is the key argument Mike makes for introducing the legislation
- No action needed at termination – the points are worthless if you are not working.
My plan and Mike’s plan do increase the cost of an hour of coverage since taking 1.5 hours off for each OT hour worked results in fewer total straight time hours worked for the same benefit package.