Frank Kollman

Congress is considering a bill that would allow employers to use “comp” time instead of cash to compensate employees for overtime hours.

Under the amendment to the Fair Labor Standards Act, employees would be given one and one-half hours of paid time off for every hour of overtime worked. As the law stands now, overtime is

computed on a workweek basis, and it must be paid in cash.

Currently, state and local governments have the right to use “comp” time instead of cash payments. It seems to work for them, but it is unlikely that Congress will grant the benefit to private employers. The Labor lobby is too strong.

So, this is probably a good time to go over the wage and hour laws to remind all employers that, despite their best efforts, they are probably violating this complicated law somehow. Here are the most likely ways.

Determining what are “hours worked” can be tricky. What do you do about employees who come in early and go home late? What do you do about travel time? Can employees be given any job duties during their lunch hour? Can employees who take a ten-minute smoke break be docked for the time?

Employees must be paid for time actually worked, and unless the break is at least 30 uninterrupted minutes, the employee must be compensated for it. Those smoke breaks are on company time, even if the employee clocks out.

As for the diligent employee who sets up 10 minutes early and leaves 20 minutes late, the government allows you to round his hours to the nearest tenth, quarter, or 10 minutes. But he still must be paid (for example, the employee who arrives at 6:50 a.m. must be paid — overtime or straight time — for a full 15 minutes if you round to the nearest quarter; if he arrives at 6:55 a.m., you owe him nothing).

Well, what if the employee asks me to work around the wage and hour laws for his convenience? Do I have to pay him even if it was his idea? The answer, unfortunately, is “yes.” The wage and hour laws make it clear that an employee cannot agree to be paid less than the law requires, even if it was his idea and it was done strictly for his benefit. In other words, the law protects employees from themselves.

The laws surrounding exempt employees (executive and administrative, mostly) are even trickier. Can I dock salaried employees for missing time? Do I have to pay a salary to get the exemption? Am I allowed to pay someone overtime who is exempt? Can I use “comp” time for exempt employees?

Essentially, exempt em-ployees must be paid on a salary basis, or the employer must pay them overtime.

If they are docked for absences of less than a full day, they are considered not salaried. They can be docked for absences of a full day or more, but only as part of a bona fide leave program.

Even so, the law says that docking a salaried employee for jury duty or temporary military service makes him not salaried for purposes of the exemption.

An employer can pay an exempt employee overtime, and he can use “comp” time. Agreeing to pay an exempt individual overtime, however, becomes part of his compensation package, and employers cannot change that compensation package except for future work.

In other words, the employee must be given notice that he will not be compensated for overtime in the future before the change goes into effect.

Employers are well advised to stay on top of the wage and hour laws for a variety of reasons. Employees and former employees can sue for back pay up to three years, an equal amount in liquidated damages, and attorneys’ fees.

Employers would be prudent to have their wage payment practices reviewed periodically to insure compliance with the Fair Labor Standards Act. The cost to the company of a Department of Labor audit or an FLSA lawsuit can be devastating.

And hope Congress passes the “comp” time amendment to the FLSA.

Frank Kollman is a partner in the law firm of Kollman & Saucier, PA, in Baltimore, MD. He can be reached by phone at (410) 727-4300 or fax (410) 727-4391. His firm’s web site at www.kollman-law.com has articles, sample policies, news and other information on employee/employer relations.