Reagan Signs Bill Letting States, Cities Offer Time Off in Lieu of Overtime Pay

President Reagan signed legislation Wednesday that allows state and local governments to continue offering compensatory time off in lieu of overtime pay.

“Without this legislation, the cost of services that state and local governments provide--police, firefighters and other services necessary to the success of any community--would have increased by as much as $3 billion per year,” Reagan said.

In a decision last February in a case known as Garcia vs. San Antonio Metropolitan Transit Authority, the Supreme Court ruled that state and local governments were required to pay overtime to all employees who worked more than 40 hours a week.

Government officials, worrying about huge overtime bills and the prospect of tax hikes to cover the costs, lobbied Congress for relief.

Under a compromise adopted by the House and Senate, compensatory time may be offered in lieu of overtime, but only if it is offered at time and a half, the same as cash overtime.

The legislation limits compensatory time to 240 hours, except for policemen, firefighters, emergency workers and seasonal employees. They could accumulate 480 hours. The employees would have to be paid cash for overtime beyond those limits.

Reagan signed the bill in a private ceremony, attended by members of Congress and others.