An Overview of Compensatory Time

What is comp time, and when do employees get time off instead of being paid for doing extra work? Compensatory time, referred to as comp time, is paid time off given to an employee instead of overtime pay.

Rather than paying employees time and a half in overtime pay, a company that operates a comp time policy gives paid time off from work, for the amount of time equivalent to the extra hours worked. 

Who is Eligible for Comp Time

The laws surrounding compensatory time vary between exempt and nonexempt employees, federal and state law, and whether the employee is a public- or private-sector employee. Employees are considered either exempt or nonexempt based on their job duties and responsibilities.

• Nonexempt employees are required to be paid the minimum wage and overtime if they work over 40 hours in a workweek.
• Exempt employees who meet specific guidelines set out by the U.S. Department of Labor are not required to be paid overtime.
• Some federal, state, and local government employees may be eligible for compensatory time off.

Review the following information on compensatory time, including who is eligible for comp time, and comp time instead of overtime pay, and how many hours' comp time employees are eligible to receive. 

Compensatory Time vs. Overtime Pay 

In some cases, for federal employees, compensatory time may be given in lieu of overtime pay. This paid time off may be approved for employees who are required to work extra hours under more flexible schedules. In addition, in certain prescribed conditions, employees of state or local government agencies such as law enforcement, fire protection, and emergency response personnel engaged in seasonal activities may receive compensatory time off.

Comp time must be paid at the same rate as overtime pay—one and a half hours of compensatory time for each hour worked. Failure to compensate an employee with identical rates is a violation of the Fair Labor Standards Act (FLSA).

Federal vs. State Law

Whether comp time can be given in place of overtime pay depends on whether an employee is considered nonexempt or exempt from overtime according to the Fair Labor Standards Act guidelines.

Some states have laws regulating when and how compensatory time can be used, and allow employers to give employees comp time. Check with the state department of labor in your location for guidelines on what is applicable to your situation.

Comp Time for Nonexempt Employees 

FLSA-covered nonexempt employees working for private employers must be paid overtime pay, at one and a half times their usual rate of pay for any hours worked outside of the regular 40-hour workweek.

Giving nonexempt employees the option to take compensatory time or extra paid time off is a violation of federal law because nonexempt employees are legally required to be paid time and a half for any extra hours worked. However, state laws may vary.

Comp Time for Exempt Employees 

Under the Fair Labor Standards Act (FLSA) regulations, private sector employers have flexibility in designing comp time policies for exempt employees. However, there is no obligation to provide comp time to an exempt employee because they are not required to be paid overtime.

Comp Time for Government Employees 

According to the Department of Labor, under certain prescribed conditions, employees of federal, state, or local government agencies may receive compensatory time off, at a rate of not less than one and a half hours for each overtime hour worked, instead of cash overtime pay. 

Law enforcement, fire protection, and emergency response personnel and employees engaged in seasonal activities may accrue up to 480 hours of comp time; all other state and local government employees may accrue up to 240 hours. An employee must be permitted to use compensatory time on the date requested unless doing so would "unduly disrupt" the operations of the agency.

What if Your Employer is in Violation of the Law?

A survey of 500 employers commissioned by TSheets revealed that almost 30% of respondents used comp time sometimes or regularly with nonexempt employees. 

Many employers (18% of those surveyed) offered nonexempt employees a choice between comp time and overtime, anticipating that some employees may actually prefer paid time off to overtime pay. 

Your employer could be in violation of the law if you are a nonexempt employee who isn't being paid overtime. The first step should be to consult with your manager or a human resources representative for information on company policies. It is possible that some organizations, particularly smaller employers, are unaware of the regulations. 

For clarification, you can contact the U.S. Department of Labor's Wage and Hour Division (WHD), which is responsible for administering and enforcing worker protection laws. The WHD is charged with ensuring that workers in this country are paid properly and for all the hours they work, regardless of immigration status. Also, check with your state labor department for information on state law in your location.

If you have questions or concerns, you can contact this department at 1-866-487-9243 or online. You will be directed to the nearest WHD office for assistance. There are WHD offices across the country with trained professionals who can help you. 

The information contained in this article is not legal advice and is not a substitute for such advice. State and federal laws change frequently, and the information in this article may not reflect your own state's laws or the most recent changes to the law.