Federal Law Alert – Legislative Update, May 5, 2017: Comp Time and Health Care
House Passes Comp Time Bill
On Tuesday, the House passed the Working Families Flexibility Act. The Act would amend the Fair Labor Standards Act to allow employees who work more than 40 hours in a workweek to choose between overtime pay in the applicable pay period, as the law requires now, or time off in the future. That time off in the future (comp time) would be banked at the rate of 1.5 hours for each overtime hour worked. For example, an employee who works 44 hours in a workweek could choose between 4 hours of pay at 1.5x their regular rate, or 6 hours of paid time off in their comp time bank.
If it becomes law, it will only apply to states that do not currently have their own overtime laws requiring premium pay for hours over 40 in a workweek.
In states where comp time becomes legal – if it becomes legal at all – it may be used only if the employee chooses comp time instead of overtime pay. Employers will not be able to make comp time a standard practice or in any way coerce employees to choose comp time instead of overtime wages. Additionally, employees will have the option of asking for payout of their unused comp time at any time with 30 days’ notice, and unused comp time will have to be paid out at the end of each year. Other limits and worker protections are included as well. Employers will not be required to offer a comp time option.
This bill still needs to pass in the Senate – where it faces an uphill battle – and be signed by the President before it becomes a law.
House Passes New Healthcare Bill
Yesterday the House narrowly passed a revised version the American Health Care Act (AHCA) – the GOP’s bill to repeal and replace the Affordable Care Act. The Senate has the next move. Rather than vote on the House bill, the Senate Republicans plan to write their own version and incorporate elements of the House bill into it.
At present, there are no action items for employers. In its current form, the AHCA keeps the employer mandate requiring employers with 50 or more full-time equivalent employees to offer minimum essential coverage. However, it reduces the employer penalties to zero. So, employer reporting requirements would remain in effect, but there would be no financial penalties for failure to offer minimal essential coverage.
If the AHCA becomes law, dropping coverage could still be financially risky according to some experts. Employers who simply drop coverage once the law goes into effect could, under some limited circumstances, potentially face lawsuits for impermissible reduction in benefits under the Employee Retirement Income Security Act (ERISA). There is some debate about this, however.
Much remains unknown at this time. The Congressional Budget Office has yet to assess the House bill, and the Senate version of the bill could turn out to be very different, in which case the differences would need to be resolved in a conference committee.
We will be watching closely as this process continues and will keep you apprised of important updates. If a final version the AHCA passes both the House and Senate and is signed by President Trump, we will notify you and explain your options going forward.