New Bill Allows Private Employers to Swap Overtime Pay for 'Comp Time'—But Only for Five Years

The new Working Families Flexibility Act of 2025 is trying to change a core rule of private employment: how overtime is paid. Right now, if you work more than 40 hours a week, your employer generally has to pay you cash at time-and-a-half. This bill proposes an alternative: compensatory time off, or "comp time," for private employees, earned at the same 1.5x rate.

This isn't just a friendly suggestion; it’s a big shift for the Fair Labor Standards Act (FLSA). The bill lets your boss offer you 1.5 hours of paid time off for every hour of overtime you work. Crucially, this only happens if you agree to it before you work the overtime, and you must have worked at least 1,000 hours for that employer in the previous year. If you’re unionized, the agreement can be made through your collective bargaining agreement. The goal is flexibility, but the trade-off is immediate cash liquidity for time off.

The Comp Time Bank: Rules and Limits

Think of this as setting up a special PTO bank just for overtime. You can only bank up to 160 hours of comp time. Once you hit that cap, the employer must switch back to paying you cash overtime for any work beyond that. This 160-hour limit acts as a safety valve, preventing you from accumulating an unmanageable amount of time off. But what if you need the cash instead of the time?

Good news: The bill includes strong employee protections here. You can change your mind at any time and request a cash-out of all your banked time. Your employer then has 30 days to pay you the cash equivalent. Furthermore, by January 31st every year, your employer is required to automatically cash out any unused time you accrued the previous year. This means your banked time won't just disappear, and you get a guaranteed annual payout if you haven't used it.

The Catch: When They Can Say No

While the cash-out options are clear, using the time off is where things get a little fuzzy. If you request to use your banked comp time, the employer has to let you use it within a reasonable time, unless using it would "seriously disrupt the business operations." That phrase—"seriously disrupt"—is where the devil lives. It gives the employer significant discretion to deny your request, which could be frustrating if you’re trying to plan around childcare or a family event. If an employer denies your request, you still have the option to demand a cash payment instead.

The Hammer: What Happens When Rules Are Broken

If an employer tries to pressure you into taking comp time (which is strictly forbidden) or fails to pay you for unused time, the bill sets up a specific, strong penalty. For any comp time the employer wrongfully withholds, they must pay the employee the value of that time plus an equal amount in liquidated damages. This means they effectively have to pay double for the time they tried to keep from you. This specific, enhanced remedy is designed to make employers think twice before violating the rules.

A Five-Year Trial Run

Perhaps the most unique feature of this legislation is the five-year sunset clause (Section 6). The entire Act—every provision, every change to the FLSA—will automatically expire five years after it becomes law. This makes the bill a massive, time-limited pilot program. To track its success (or failure), the bill mandates that the Government Accountability Office (GAO) report to Congress annually for four years on how many employees are using comp time, how many complaints are filed against employers, and how much money the Department of Labor recovers from enforcement actions.

This sunset provision creates a strange dynamic. If you start relying on comp time for flexibility, those arrangements could vanish in five years unless Congress votes to extend the program. For employers, it means implementing complex new tracking and payment systems that might only last half a decade. It’s a big policy experiment with a clear expiration date.