Overtime paid as time off option

Summary#

The Working Families Flexibility Act of 2025 would amend the Fair Labor Standards Act of 1938 (FLSA), rather than create a separate law. Its stated goal is to let eligible private-sector employees receive paid time off instead of cash for overtime.

  • An employer may offer compensatory time at no less than 1.5 hours off for each overtime hour, but does not have to offer it.
  • Employees must have worked for that employer for at least 1,000 hours during a continuous 12-month period before agreeing to or receiving the time. Union-represented employees would follow their collective bargaining agreement. For employees without union representation, the agreement must be made before the work, recorded in writing or another verifiable way, and be knowing, voluntary, and not a condition of employment.
  • Employees could accrue up to 160 hours. They could ask to use the time, which the employer must allow within a reasonable period unless doing so would unduly disrupt operations.
  • The bill sets rules for paying out unused time, including when employment ends, and bars employers from coercing employees about choosing or using compensatory time.
  • The bill would require updated employee notices, annual reports to Congress for four years, and would expire five years after enactment.

What it means for you#

  • Private-sector employees: If an employer offers this option and the conditions are met, you could take paid time off instead of receiving cash overtime pay. You could withdraw a non-union agreement at any time and request cash for all unused accrued time; the employer would have 30 days to pay.
  • Employees using accrued time: Your employer would have to pay for unused time when your job ends, or under the bill’s other payout deadlines. The rate would be at least the higher of your regular rate when the time was earned or your final regular rate.
  • Employees requesting time off: The employer must allow use within a “reasonable period” unless it would “unduly disrupt” operations. The bill does not define those terms.
  • Employers: You could offer this option only under the bill’s agreement rules. You could discontinue an offer with 30 days’ notice, except where a collective bargaining agreement provides otherwise. You could also pay out accrued time above 80 hours with 30 days’ notice.
  • Public-agency employees: The bill expressly excludes them from this new private-sector option.

Money#

No publicly available information on estimated federal or employer costs.

  • Employers would owe cash for unused compensatory time under the bill’s payout rules, including at job termination.
  • The bill would require the Labor Department to update notice materials and the Government Accountability Office to prepare reports. It provides no cost or staffing estimates.
  • For employees, the option changes when overtime compensation is received and whether it is paid as time off or cash; it does not erase the overtime compensation owed under the bill.

What is unclear#

  • The supplied material does not include the full FLSA, so the exact current-law rules and how this amendment would interact with them could not be verified.
  • The bill does not define “reasonable period” or “unduly disrupt.”
  • It does not set out a process for resolving disagreements over time-off requests or the use of an alternative 12-month payout period.
  • The bill does not state a separate start date for the new option; it gives deadlines that run from enactment. Passage is uncertain because it has not become law.
  • The bill does not explain how the four years of reports would be funded.

Case for#

  • A possible argument for the bill is that it gives eligible workers a choice between cash overtime pay and paid time off.
  • The consent rules for employees without union representation, the right to withdraw an agreement, and the ban on coercion are safeguards against making the choice a job requirement.
  • The payout rules protect the value of unused time, including if a worker leaves the job or their regular rate later rises.
  • The required reports could provide information on use, complaints, enforcement, and remedies before the law expires.

Case against#

  • One concern is that workers would receive cash later if they choose time off; the bill does not guarantee that time off can be taken on the worker’s preferred schedule.
  • The employer can deny a requested time off within a reasonable period if use would unduly disrupt operations, and those terms are undefined here.
  • The 1,000-hour requirement excludes employees who have not reached that threshold with their current employer.
  • The bill permits employers to end a compensatory-time policy with notice in most cases, which may limit how long the option is available.
  • The bill’s five-year sunset means the new option would expire unless extended.