House Committee on Education and Labor
U.S. House of Representatives

As working men and women find it increasingly difficult to balance work and family responsibilities, their employers are often hampered by outdated federal law in their attempt to accommodate employee requests for more flexibility in work schedules.  The Family-Friendly Workplace Act removes obstacles in federal law that prevent many employers from providing increased flexibility to their employees who are covered by the overtime provisions of existing law. 

• The Fair Labor Standards Act (enacted in 1938) prohibits private sector employers from offering their employees the choice of opting for paid time off as compensation for working overtime hours, although public sector employers and employees have long enjoyed this flexibility. 
• The Family-Friendly Workplace Act gives employers the option of offering employees the choice of paid time off in lieu of cash wages for overtime hours worked if the employee prefers to take compensatory time instead of overtime pay.  An employee is always entitled to opt for overtime cash wages.   
• An employee opting to take paid compensatory time in lieu of overtime cash wages receives paid time off at a rate of one-and-one-half hours of compensatory time per hour of “overtime” pay earned, e.g., an employee working 48 hours in a week would receive either eight hours of pay at time-and-a-half or twelve hours of paid time off. 
• There would have to be a written agreement between the employer and the employee, entered into knowingly and voluntarily by the employee (where the employee is represented by a union, the agreement to offer compensatory time must be part of the collective bargaining agreement negotiated between the union and the employer).  A compensatory time agreement may not be made a condition of employment.   
• As with cash overtime pay, compensatory time accrues at one-and-one-half times the employee’s regular rate of pay for each hour worked over 40 in a seven-day period.  The legislation does not affect the 40-hour workweek or change the way by which overtime pay is calculated.  
• Employees could accrue up to 160 hours of compensatory time each year.  An employer would be required to pay cash wages (i.e., “cash out”) any accrued, unused compensatory time at the end of each year. 
• Employees always have the right to receive cash wages for overtime worked.