Originally created 02/26/97

Overtime pay or time off - who should choose?



WASHINGTON - Football games, school plays, doctors appointments: When both Mom and Dad work, time off can be priceless. But for some parents, overtime work and the cash it brings are a matter of survival.

It's those competing needs - and business interests, too - that Congress and President Clinton must balance as they get set to reconsider making comp time, or earned time off, an alternative to overtime pay.

The idea, supporters say, is that with a choice between cash and time off, every worker could get what he or she most needs.

The risk, caution labor unions and other detractors, is that profit-driven firms would be tempted to exploit the availability of cheaper overtime labor.

"We'd be entering a huge unknown," said Martin Malin, director of the Institute of Law and the Workplace at Chicago-Kent College of Law. "This is an area that offers a lot of promise, but the concerns raised ... should be taken seriously."

About 67 percent of American workers are now covered by the Fair Labor Standards Act, which guarantees one-and-a-half times regular wages for every hour worked beyond a 40-hour week. Most blue-collar factory, food service, construction and clerical workers are covered, along with less obvious folks such as computer analysts.

Such workers currently can't waive their right to overtime pay, or trade it for another benefit, such as paid vacation. If a worker needs emergency time off to take a child to the doctor, the employer can only grant a furlough. Companies can also require an employee to take unpaid leave to wipe out the cash value of overtime work during the same pay period - usually restricting any flexibility to a two-week period.

The case is much different for professionals, managers and administrative employees who exercise independent judgment on the job. Because they are exempt from the law, they earn a fixed annual salary and don't get paid extra for long hours. But firms can offer them an increasingly popular benefit: flexible work schedules.

About 22 percent of such professionals are allowed to vary their hours, according to Labor Department figures. Some work long days early in the week and take Friday off. Others pull a marathon stretch of work, then take a vacation.

A bill near the top of the Republican congressional agenda would allow companies to offer more of that scheduling flexibility to hourly workers, too.

"It seems to me that to allow working people to be good Moms and Dads is a laudable objective," said Sen. John Ashcroft, R-Mo., the bill's author.

Although he vetoed a similar bill last year, Clinton promised during last fall's campaign to do something to help overworked Americans in his second term.

Ashcroft's bill would allow, but not require, companies to offer compensatory time off as an alternative to overtime pay. Workers would earn comp time at a rate of 1« hours for every hour of overtime work, and could "bank" up to 30 days a year. Use of banked comp time would be at the worker's discretion, unless an absence would "unduly disrupt the operations of the employer." Banked comp time also could be traded for cash.

Ashcroft says stiff penalties would discourage firms from coercing workers to take comp time instead of overtime pay. And big and small companies, and their trade groups, are lobbying hard for the bill.

But labor unions worry that making overtime work cheaper will help nothing but corporate profits.

"We don't think in practice in the real world this is going to be voluntary," said Alan Reuther, legislative director for the United Auto Workers. "Not when an employer is sitting there getting to decide what job you do and whether you get a raise."

The fear is that companies, to save money, would assign most overtime hours to people who want comp time, Reuther said. Workers who depend on overtime cash would be out of luck. In a recent AFL-CIO poll, 64 percent of workers said they need money more than time off.

The experience of government workers, who've had the comp time option since 1985, provides some insight into the pros and cons.

Lonnie Golden, a Penn State economics professor, said there's no doubt comp time is popular with public sector workers, but it has tended to put them in awkward positions.

Because it costs nothing up front, comp time has encouraged government managers to ask workers to put in longer hours. Heavy workloads then make it hard for people to use time off they've banked.

"Employees are in effect subsidizing their employers by loaning time, interest free," said Golden.

In fact, maxed-out comp time banks are so common in the public sector, Golden says, that state and local governments are now pushing to increase limits.