New Bill Proposes Letting Private Sector Workers Swap Overtime Pay for Time Off, Sets 5-Year Trial Period

This proposal, the 'Working Families Flexibility Act of 2025,' aims to amend the Fair Labor Standards Act (FLSA) to give private-sector employees the option to receive paid time off instead of cash for overtime hours worked. Specifically, Section 2 outlines that for every hour of overtime worked, an eligible employee could choose to accrue one and a half hours of 'compensatory time' or 'comp time.' This option is only available if agreed upon through a collective bargaining agreement or, for non-union workers, via a written, voluntary agreement made before the work is performed. Critically, the bill states this choice cannot be a condition of employment. The entire framework is set to expire five years after enactment, per Section 6, making this essentially a trial run.

Trading Paychecks for Time Off: How It Works

So, what's the deal? If this passes, employees who have worked at least 1,000 hours for their employer in the previous 12 months become eligible. They can bank up to 160 hours of this comp time. Think of it like this: work 10 hours of overtime, and you could either get your usual time-and-a-half pay or bank 15 hours of paid time off for later. Section 2 requires employers to cash out any unused comp time annually (typically by January 31st) or within 31 days if they use a different 12-month tracking period. If an employee leaves their job, any unused comp time must be paid out.

Using Your Time and Your Rights: The Details Matter

The bill includes rules around using and managing this banked time. Employees can request to use their accrued comp time, and employers are supposed to permit it 'within a reasonable period,' as long as it doesn't unduly disrupt operations (Section 2). This 'reasonable period' and 'disrupt operations' language could be key – how easy it is to actually use the time might vary. Employees also have the right to change their mind and request a cash payout for their accrued comp time at any point, which the employer must provide within 30 days at the employee's regular pay rate (using the rate when the time was earned or their final rate, whichever is higher). Employers are explicitly forbidden from pressuring employees into choosing comp time over cash. If an employer violates these rules, Section 3 amends FLSA Section 16(b) to make them liable for the unpaid compensation plus an equal amount in damages.

Watching the Clock: Oversight and Sunset

Recognizing this is a significant change, the bill includes oversight mechanisms. The Secretary of Labor is tasked (Section 4) with updating the standard FLSA employee rights notices within 30 days. More substantially, Section 5 requires the Government Accountability Office (GAO) to report to Congress annually for four years (starting two years after enactment) on how this comp time option is working. They'll track how many employers offer it, how many employees choose it, any complaints filed about violations, and enforcement actions taken. Finally, the five-year sunset clause in Section 6 means this whole system automatically ends unless Congress acts to extend it, ensuring a mandatory review of its real-world impact.