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Bend the Rules

Are overtime laws too rigid? congress is looking at ways to increase their flexibility.

It's high time for overtime reform-or at least that's the view of many small-business groups that are optimistic that this new Congress, with its Republican-controlled Senate, will pass changes to the Fair Labor Standards Act (FLSA). At the top of the list is modernizing the overtime provision of the 1938 law, which dictates that hourly workers be paid time-and-a-half beyond a 40-hour week.

Groups like the U.S. Chamber of Commerce want to give businesses and workers more flexibility by allowing employees to take time off in lieu of overtime pay. The logic is that, for example, parents might prefer extra time off to spend with children, either participating at school or staying home during a sickness, rather than extra pay. However, opponents of comp time, led by labor unions, argue employers would use comp time flexibility to force employees to take extra time off as a means of achieving payroll savings.

Comp time bills have passed the House in previous years but have foundered in the Senate. That's less likely to happen now that Sen. Judd Gregg (R-NH) is chair of the Senate Health, Education, Labor and Pensions (HELP) Committee. The "Workplace Flexibility Act" would allow employees the option of taking time off in lieu of overtime pay and give them the option of "flexing" their schedules over a two-week period.

A second, narrower FLSA overtime reform bill will come out of the House. Rep. Patrick Tiberi's (R-OH) Sales Incentive Compensation Act exempts from FLSA overtime provisions for certain "inside sales" employees. Tiberi's bill passed a House subcommittee in the last Congress by a vote of 8-6.


Stephen Barlas is a freelance business reporter who covers the Washington beat for 15 magazines.

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This article was originally published in the February 2003 print edition of Entrepreneur with the headline: Bend the Rules.

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