Compensatory or comp time is paid time off granted to employees in lieu of overtime wages. It allows employees to accrue extra paid time off based on hours worked beyond their regular schedule, typically at a rate of 1.5 hours of comp time for each hour of overtime. Comp time must be agreed upon between employer and employee or specified in company policy, and it must comply with applicable labor laws regarding accrual and usage limits.

Why do employers offer compensatory time off?

Employers offer compensatory time off (comp time) for several reasons:

  • Cost Savings: It allows employers to manage overtime costs by providing paid time off instead of additional wages for overtime work.
  • Employee Flexibility: Comp time allows employees to take time off when needed, improving work-life balance and job satisfaction.
  • Compliance with Labor Laws: It helps employers comply with overtime laws and regulations while offering an attractive benefit to employees.
  • Retention and Morale: Offering comp time can enhance employee morale and retention by demonstrating flexibility and consideration for employees’ time.
  • Operational Needs: It allows employers to manage workload fluctuations or operational demands without incurring immediate financial expenses associated with overtime pay.

How is compensatory time off earned?

Compensatory time off (comp time) is typically earned based on the number of overtime hours an employee works. Here’s how it is earned:

  • Overtime Work: When an employee works hours beyond their regular work schedule, typically defined as more than 40 hours in a workweek for non-exempt employees under federal law, they accrue overtime hours.
  • Accrual Rate: Comp time is earned at a rate of 1.5 hours for each hour of overtime worked. For example, if employees work 2 hours of overtime, they earn 3 hours of comp time.
  • Agreement or Policy: Comp time accrual must be agreed upon between the employer and employee or specified in the company’s policy. This agreement should outline how comp time is tracked, accrued, and used.
  • Compliance: Employers must comply with federal, state, and local laws regarding accrual, usage, and comp time limits, ensuring that time is provided fairly to employees and meets legal requirements.
  • Documentation: Accrued comp time should be accurately tracked and documented, typically in the employer’s timekeeping or payroll system, to ensure transparency and compliance with labor laws.

Does the law require compensatory time off?

Federal law does not require compensatory time off (comp time) for private-sector employers. Under the Fair Labor Standards Act (FLSA), private employers must generally pay non-exempt employees overtime wages (typically 1.5 times the regular rate) for hours worked over 40 in a workweek. 

Public sector employers, such as government agencies, may offer comp time instead of overtime pay to their employees under specific conditions outlined in the FLSA.

How to use compensatory time off?

To use compensatory time off (comp time), employees should first obtain approval from their supervisor or employer. Submit a formal request outlining the dates or hours you wish to use as comp time. Ensure compliance with company policies and applicable labor laws regarding comp time usage limits and procedures. Maintain accurate comp time accrual and usage records and communicate with supervisors regarding scheduling and workload implications.

Compensatory time (comp time) legality varies based on whether employees are classified as exempt (salaried) or non-exempt (hourly) under the Fair Labor Standards Act (FLSA):

  • Salaried Employees (Exempt): Under federal law, exempt employees are generally not entitled to overtime pay or compensatory time. They receive a fixed salary regardless of hours worked beyond 40 per week.
  • Hourly Employees (Non-Exempt): The FLSA mandates that non-exempt employees be entitled to overtime pay (typically 1.5 times the regular rate) for hours worked over 40 in a workweek. Employers may offer comp time instead of overtime pay in certain circumstances, provided it complies with federal and state laws.
  • Public Sector Employees: Public sector employers may offer comp time instead of overtime pay to exempt and non-exempt employees under specific conditions outlined in the FLSA and applicable state regulations.

Employers must carefully review and comply with FLSA regulations and state-specific labor laws when implementing compensatory time policies for their employees, ensuring legality and fairness in compensation practices.

Keep reading

Back to top