Comp Time: Is it Legal?

HR Resource
October 10, 2012 — 1,679 views  
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Comp Time: Is it Legal?

Some employers allow employees to take compensatory time off, also known as comp time, as a substitute for overtime pay. Instead of being paid for overtime hours worked, the employee accrues paid time off to take at a later date. With limited exceptions, this practice is illegal.

Under the Fair Labor Standards Act (FLSA), an employee who is not specifically exempted from the law's overtime requirements must receive overtime pay for all hours worked over 40 hours in a week. Overtime must be paid at a rate of at least 1.5 times the nonexempt employee's regular rate of pay. Under FLSA, each work week stands alone. This means an employer may not average hours over two or more work weeks. If an employee works 45 hours one week and 35 hours the next week, the employer must pay overtime for 5 hours in the first week, even though the employee's hours for both weeks average 40.

An employer may be able to avoid payment of overtime by granting comp time off within the same work week. If, for example, an employee works nine hours one day and seven hours the next, the employer need not pay overtime if the total hours worked in the week does not exceed 40. Note this exception does not apply in those states that have a daily overtime requirement, so make sure to check the laws of your state. 

Another exception to the overtime pay requirement may apply if the employee is paid every two weeks, and works overtime during the first week of the pay period. In that case, the employer may grant comp time during the second week; however, the time off must be given at the time and one-half rate. For example, for two hours of overtime worked during the first week, the employee must receive three hours of paid time off to take during the second week.

Finally, federal and state government employees may receive comp time in lieu of overtime pay under certain conditions. Comp time must accrue at a rate of no less than 1.5 hours for each hour of overtime worked. Police, fire protection, emergency response, and seasonal employees may accrue up to 480 hours of comp time; all other employees are limited to 240 hours. There also are requirements regarding when an employee must be allowed to use comp time and for the pay-out of unused time.

 

 

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