By: Ross Eisenbrey, vice president of the Economic Policy Institute.
Every so often you see a scam so perfect you have to tip your hat to the perpetrators, even though you detest their goal and the harm it will cause. Such is the Republicans' comp time proposal. It's a scheme to undermine the 40-hour workweek, make overtime work cheaper and more common, and reduce worker pay, all disguised as a "family-friendly" way to bring flexibility to stressful work schedules. The controversial "Family Time Flexibility Act" is expected to go to the House floor for a vote during the latter part of this week. Unfortunately, the only flexibility the bill offers isn't for workers. It's for employers, who stand to win sweet release from their legal duty to pay employees for overtime work.
The 40-hour workweek was created in 1938 by the Fair Labor Standards Act (FLSA) as a way to increase workers' wages and spread jobs around at a time of perilously high unemployment. Before that there was no minimum wage and businesses routinely worked employees 10 hours a day, six days a week. In the midst of the Great Depression, FDR and Congress agreed that shorter workweeks were a necessity, but rather than ban overtime work, they chose to penalize it, making each hour beyond 40 in a week 50 percent more expensive. For the most part, the law has worked. The 40-hour workweek is an accepted part of our culture and the weekend is an almost sacred part of American life.
Turning the idea of a limited workweek into reality depends on the enforcement mechanism, the overtime premium. If employers didn't have to pay more for overtime work, they would feel free to schedule more and more of it. Many salaried workers are currently exempt from the law's overtime protections, and the effect on their work hours is clear. The employer of an exempt salary worker pays no more for 50 or 60 hours of work than for 40. It's no surprise, then, that 44 percent of exempt workers work overtime, versus only 20 percent for workers who are protected by the law.
Comp time -- substituting the promise of time off in the future for overtime pay now -- would reduce the cost of overtime to employers in several ways. In some instances, comp time would make overtime even cheaper for employers than regular time. Comp time can be cost-free to an employer who controls the timing of the employees' use of their leave -- permitting it, for example, only when business is slow and coworkers can do the work of the absent employee, while paying nothing at the time overtime is originally performed. If overtime is cheaper than regular time, employers will have an economic incentive to demand as much overtime as possible.
And so, as a perverse present for working mothers, probably America's most-stressed workers, Republicans in Congress announced their intention to pass comp time before Mother's Day, while selling it as a way for workers to reduce their hours and gain flexible schedules. At first glance, it seems plausible: work an hour of overtime now and get an hour-and-a-half off later on. A fundamental problem with the bill, however, is the fact that it doesn't give the worker any guarantee that she can take the time when she wants it or needs it, or at all. The boss can deny time off whenever he decides it would be unduly burdensome. In the public sector, where comp time is already an established fact of work life, workers have built up hundreds of hours in comp time leave banks that they never get to use. They end up working more, not less. The profit motive and competitive pressures are likely to make things even worse in the private sector.
Far from being a benefit for public employees, comp time was the price demanded by state and local government employers when Congress brought public employees under the protection of the Fair Labor Standards Act in 1985. The employers had set up comp time systems before the federal law applied to them, and they argued it would be too expensive to have to pay for overtime. Now, business interests are saying it's unfair that they don't have the same right to avoid paying for overtime. Not surprisingly, women's groups, employee groups and unions are outspokenly opposed to this supposed "benefit."
The bill's supporters say employees who are denied the use of their comp time leave won't lose anything because they can cash out their unused comp time at the end of the year. But the employer doesn't have to pay interest on what amounts to an unsecured loan of the employee's pay. Large employers can save millions of dollars "borrowing" this way from their employees, rather than from commercial lenders.
And what about employers that go out of business, leaving workers with thousands of hours of comp time in the leave bank? Each year, about half a million employers go belly up, many of them financial failures. The sponsors of the bill have refused to add bankruptcy protections or requirements that the employees' pay be held in trust for them in escrow accounts.
The comp time bill's supporters' talk about flexibility is just that -- talk. Even though white collar workers without FLSA protection are more than twice as likely to work overtime as covered workers (and therefore, to feel stressed and overworked), the comp time bill offers no "solution" for exempt workers. No option to get time-and-a-half pay for their overtime work and no right to get time-and-a-half off, either, even though the Republicans' own witness, Ms. Deborah McKay, testified for it. The bill's authors really only have one goal in mind -- to reduce the cost of overtime work for employers so they can schedule more of it.
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