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Allows private-sector employers to offer nonexempt employees compensatory time off (comp time) instead of cash overtime at a rate of at least 1.5 hours of comp time per overtime hour, subject to accrual, payout, and anti‑coercion rules. It creates a new civil remedy for employers who unlawfully deny or withhold comp time payouts, requires the Labor Department to update employee notices within 30 days, orders Comptroller General reports on implementation beginning two years after enactment, and sunsets the law after five years.
Adds a new subsection (t) titled “Compensatory time off for private employees” to Section 7 of the Fair Labor Standards Act (29 U.S.C. 207).
General rule: An employee may receive compensatory time off in lieu of monetary overtime pay at a rate not less than 1.5 hours of comp time for each hour of employment for which overtime pay would be required.
Conditions for offering comp time: Employers may provide comp time only if done in accordance with either (A) applicable provisions of a collective bargaining agreement with the certified or recognized labor organization, or (B) for unrepresented employees, an agreement reached before the work is performed and affirmed by a written or otherwise verifiable record maintained under section 11(c).
Within the unrepresented-employee condition: the record must show (i) the employer offered and the employee chose comp time in lieu of monetary overtime pay, and (ii) the agreement was entered into knowingly and voluntarily and not as a condition of employment.
Maximum accrual: An employee may accrue no more than 160 hours of compensatory time.
Who is affected and how:
Employees (private‑sector, nonexempt/hourly workers): Gain the legal option to take comp time instead of immediate cash overtime at a 1.5:1 rate. Practical effects will vary: some workers may value time off, while others—especially low‑income workers—may prefer cash pay and could be disadvantaged if employers push comp time. Protections against coercion are included, but enforcement and workplace power dynamics will determine how strongly employees can exercise choice.
Employers and businesses: Receive flexibility to offer comp time as an alternative to cash overtime, which can reduce immediate payroll cash outflow and provide scheduling flexibility. Employers will face compliance obligations: tracking accruals, managing payout obligations on termination or other payout triggers, updating employee notices, and potential liability (wages + liquidated damages) for violations. Human resources, payroll systems, and policies will need updates; training and recordkeeping costs may rise.
Department of Labor (DOL): Must revise official FLSA notice materials and enforce the new statutory provisions. Expect new administrative actions, guidance, payroll audit attention, and potentially increased complaint/investigation activity.
Comptroller General/GAO and Congress: Charged with monitoring and reporting outcomes, complaints, enforcement actions, and remedies; reports will inform oversight and any reconsideration of the law before sunset.
Broader labor market effects: If widely adopted, comp‑time could change how overtime is compensated across industries—reducing cash wages paid out as overtime but increasing time‑off benefits. Effects on low‑wage workers, scheduling stability, and bargaining dynamics (including collective bargaining in union settings) will depend on employer practices and enforcement. Temporary five‑year sunset creates a built‑in evaluation window but also legal uncertainty after expiration.
Risks and implementation issues:
Modifies subsection (b) to exclude from its scope violations covered by a newly added subsection (f), and adds new subsection (f) establishing a specific damages rule for employers who violate 29 U.S.C. 207(t)(4) (section 7(t)(4)). The new subsection (f) prescribes liability equal to the employee’s rate of compensation for each hour of compensatory time accrued plus an additional equal amount as liquidated damages, reduced by the rate of compensation for each hour of compensatory time used.
Adds a new subsection (t) to 29 U.S.C. 207 authorizing private-sector employers to provide compensatory time off in lieu of monetary overtime pay under specified conditions, limits, payment rules, anti-coercion protections, and definitions.
Expand sections to see detailed analysis
Referred to the House Committee on Education and Workforce.
Introduced April 10, 2025 by Mary E. Miller · Last progress April 10, 2025
Placed on the Union Calendar, Calendar No. 422.
Reported (Amended) by the Committee on Education and Workforce. H. Rept. 119-496.
Ordered to be Reported (Amended) by the Yeas and Nays: 19 - 15.
Committee Consideration and Mark-up Session Held
