A department, agency or institution within the Executive Department of State Government which is authorized by law to make appointments in the classified or unclassified service may enter into an agreement with an organization representative of state employees which has been designated and recognized pursuant to the Fair Labor Standards Act of 1938, 29 U.S.C. § 201 et seq., for the provision of compensatory vacation time instead of monetary payment for overtime. If an employee is not a member of such an organization, the department, agency or institution may enter into such an agreement with the employee directly.