Employers are trying to find unique and innovative ways to appeal to the very best workforce talent. Out of these efforts, scheduling models such as flex time and the Results Only Work Environment (ROWE) are emerging and challenging traditional practices.
Historically, the terms of work have been dictated by employers. Company owners and their agents tell employees when to come in, what to do and when to go home.
However, modern perspectives and legal changes are challenging the status quo, and work-life balance and wellbeing for workers has gradually improved. For example, the U.S. government’s Fair Labor Standards Act (FLSA) of 1938 made certain stipulations for the first time in American history. FLSA imposed minimum age restrictions on workers, minimum wage floors for compensation and overtime prescriptions that make it more costly for employees to work long hours.
At the same time, a kind of free market capitalism in the workplace has led to competition among employers to think up new ways to differentiate their compensation and benefits packages to recruit and retain talented workers. Employer innovations that are not legally compulsory have included retirement benefits, commitments to favorable schedules, paid leave, childcare and a whole host of other benefits.
Also, healthcare benefits, wholly or partially subsidized by employers, were a product of market forces for decades before they became mandatory for large (i.e. 50 or more employees) employers under the Affordable Care Act of 2010. Healthcare benefits are still optional for employers with less than 50 employees.
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What Are Flex Time and ROWE?
With flex time, employees have flexibility and even discretion over the hours they work. In this situation, employers require that employees work a certain number of hours in a given week, month or other stipulated period. However, employees are given the freedom to determine when they want to work those hours. So if employees want to work Mondays and Tuesdays – but not Wednesdays or Thursdays – that’s fine under flex time, as long as they log the total number of required hours in the pay period.
Another model is called the Results Only Work Environment (ROWE). The ROWE takes flex time a step further.
In this model, not only do employees have dominion over the specifics of the times they work, but there also is no minimum or maximum hour prescriptions for the work they do. Instead, all that employers care about in a ROWE context is that the employees deliver on the productivity targets set for them. For instance, those targets could involve producing a certain number of products, reaching a certain sales goal or completing projects on time.
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Flex Time and ROWE Would Not Work for Every Profession
Naturally, these scheduling models are a huge benefit to employees, as they cede a level of control over time and task that traditionally always belonged to the employer. But flex time and ROWE are not feasible for a lot of jobs.
For instance, essential occupations such as military, law enforcement, fire, EMS, transportation and security workers are not the kinds of roles where workers can decide when they want to work. Similarly, the employee schedules of customer service jobs are dictated by customer needs.
In fact, our society would collapse if we did not coordinate mandatory coverage for certain critical jobs. Imagine what would happen, for example, if police officers were given discretion over their schedules and every officer decided to take weekends off. Clearly, that situation would lead to trouble.
Nonetheless, flex time and ROWE can still be attractive and feasible for a lot of professional and non-essential workers, such as:
- Software programmers
- Web design professionals
- Graphic artists
- Data analysts
There are also other project-based jobs upon which other people are not critically dependent at specific times of the day or week. All of these kinds of roles could hypothetically embrace modern flexible schedule philosophies.
Employers Need to Be Careful
However, employers still need to be careful about a few things in terms of payroll budgets and legal compliance. First, employee-dictated flexible scheduling could lead to potentially unexpected overtime expenses.
The FLSA requires that overtime be paid for any hours beyond 40 in a given pay week. Additionally, some states have also added daily overtime laws that require overtime pay for anything beyond eight hours in a day, according to Patriot Software.
Suppose that an employer, ABC Corp, pays employees biweekly, as many companies do. ABC Corp decides to adopt a flex-time policy so that employees can choose their own schedules.
ABC Corp only requires that employees work – but not exceed – the required 80 hours in each biweekly pay period. If no other parameters are placed on the situation, it could lead to substantial additional costs for ABC Corp.
For example, if an employee of ABC Corp decides to work 50 hours in one week and 30 in the next, he or she would incur 10 hours of overtime pay for that pay period. The FLSA overtime requirements are based on weekly hours and do not allow for “averaging” of hours within multiple-week pay periods. Additionally, if the ABC Corp employee works in a state with specialized overtime regulations like California or Colorado and decides to work more than eight hours in a day, this situation could also lead to unanticipated overtime expenses.
So employers who want to embrace flex time or ROWE need to first understand the laws (state and federal) that govern their overtime obligations. Then, they should put the appropriate guardrails in place to ensure that employees cannot make scheduling decisions that incur unplanned overtime costs for the company.
In a similar vein, large employers who employ part-time workers need to be conscious about hour caps for benefits that are mandated under laws like the Affordable Care Act (ACA) and the Family Medical Leave Act (FMLA). Both of these federal programs stipulate minimum average weekly or annual hours before employees become eligible for benefits. So if employers want to avoid costs for healthcare or unexpected leave from part-time employees, they should be careful to ensure that part-time workers who are given discretion over their schedules do not exceed the relevant hour thresholds for healthcare coverage.
Flex time and ROWE can be extremely attractive working situations for employees in jobs that are compatible with these models, and they can help employers to acquire strong talent. However, employers need to be aware of the full implications of giving employees discretion over their schedules. They should ensure that the proper checks and balances are in place to prevent unexpected and unintended challenges from arising.