New Overtime Bill Lets Private Workers Bank 160 Hours of Time Off Instead of Cash Overtime Pay

The Working Families Flexibility Act of 2025 is looking to change how private sector workers get paid for overtime. Right now, if you work more than 40 hours a week, you get time-and-a-half in cold, hard cash. This bill creates a new option: you can agree to take paid time off—called compensatory time—instead of the cash. For every hour of overtime you work, you bank 1.5 hours of comp time, but this arrangement has to be agreed upon before you put in the extra hours (SEC. 2).

Trading Cash for Time: The New Overtime Deal

This is a big shift, essentially giving employers the ability to offer time off as the primary reward for overtime, provided the employee agrees. To even be eligible for this comp time option, you must have worked at least 1,000 hours for that employer in the previous year. You can bank up to 160 hours of this comp time. If you hit that cap, your employer must pay out the excess in cash. Any time you have left over by December 31st must be paid out by January 31st of the next year, ensuring the time doesn't just sit there forever (SEC. 2).

For a lot of folks juggling childcare or other responsibilities, the idea of getting 1.5 days off for every extra day worked might sound great. But here’s the rub: if you need that overtime cash to cover rising rent or groceries, you might feel pressured to agree to the time-off option to stay in good standing, especially since the agreement must be made before the work is done. The bill explicitly bans employers from coercing you, but in a non-union workplace, the line between ‘voluntary agreement’ and ‘soft coercion’ can get pretty blurry.

The 'Use It or Lose It' Catch

So, you’ve banked 80 hours of comp time—enough for two weeks off. When can you use it? The bill says your employer must grant your request for time off within a “reasonable time,” unless letting you take the time would “unduly disrupt the business operations” (SEC. 2). That phrase, “unduly disrupt,” is a massive loophole. It hands your boss a powerful veto, allowing them to deny your request if they feel short-staffed or busy. This means you could have a pile of banked time but be unable to use it when you actually need it—like for a family emergency or a planned vacation. If you can't use it, the time eventually gets paid out, but only on the employer's schedule (at year-end or if they decide to pay the excess).

If you change your mind and decide you want the cash instead of the banked time, you can request a payout in writing, and your employer has 30 days to pay you for all the unused hours. If you quit or are fired, they have to pay out the balance immediately. Crucially, if an employer violates the rules—say, by denying your payout or illegally coercing you—they face stiff penalties. Under the new remedies section, they owe you double the value of the mismanaged time, which is a strong deterrent against bad behavior (SEC. 3).

The Five-Year Expiration Date

Here’s a detail that adds instability: the entire Working Families Flexibility Act is set to expire five years after it becomes law (SEC. 6). This means the rules, the agreements, and the entire system will just disappear unless Congress passes a new law to extend it. For both businesses and workers, building a compensation plan around a temporary law creates uncertainty. To track how this new system is working (or not working), the Government Accountability Office (GAO) is required to report to Congress every year for four years on how many people are using the comp time option, how many complaints are filed, and how many enforcement actions the Department of Labor takes (SEC. 5). This oversight is key to understanding the real-world impact of trading cash wages for time off.