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Timely Decision

Republicans and Democrats do battle over employee comp time.

Will small-business owners back their employees up against a wall and pressure them to take paid time off-called "comp time"-instead of paying them time-and-a-half for overtime work? That's the contention of the Clinton administration, congressional Democrats and the AFL-CIO, who are opposing GOP House and Senate bills that give employers the option of offering comp time-in lieu of pay-to employees.

Comp time is prohibited under the Fair Labor Standards Act (FLSA), established in 1938, which requires employers to pay time-and-a-half to nearly all hourly employees who work overtime. Both Republicans and Democrats agree the prohibition is an anachronism, but there are partisan differences over how to structure a comp-time provison.

The Republican-backed Working Families Flexi-bility Act (H.R. 1) would eliminate the comp-time restriction. That bill passed the House in March by a narrow margin, which bodes ill for any Republican effort to override the promised Clinton veto.

A veto, however, is not an issue until the Senate passes the bill. Although Sen. John Ashcroft's (R-MO) Family Friendly Work- place Act (S.4) passed the appropriate committee in March, Senate Democrats are likely to filibuster S.4 when it reaches the Senate floor, unless some significant changes are made.

The two Republican bills have primarily the same central features: They modify the FLSA to allow employers to offer employees one-and-a-half hours off in lieu of time-and-a-half pay for each overtime hour worked.

Employers would have to pay the value of the unused comp time at the end of the year, or workers could give the employer 30 days' notice and claim the balance in cash. The bills also give employers the same right to "cash out" a worker's accrued comp time at their discretion; however, that applies only to time accrued over 80 hours.

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This article was originally published in the July 1997 print edition of Entrepreneur with the headline: Timely Decision.

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