What is Compensatory Time Off?
Compensatory Time Off, or comp time, is a policy in which an employer provides employees with paid time off instead of paying overtime wages. This policy is allowed under the Fair Labor Standards Act (FLSA) in the United States and is commonly used by employers in both the public and private sectors.
Under the FLSA, non-exempt employees who work over 40 hours in a workweek are entitled to overtime pay of at least one and a half times their regular pay rate. However, an employer may sometimes offer comp time as an alternative to paying overtime wages.
Comp time allows employees to accrue paid time off for the extra hours worked, which they can use later. For example, if an employee works 50 hours a week, the employer may offer them 10 hours of comp time to use later instead of paying them overtime wages.
Guidelines
- Agreement: Employers must have a written agreement with employees before providing comp time. The agreement should state the terms and conditions of the policy, such as how comp time will be accrued, how much time can be accrued, and how it can be used.
- Accrual limits: Employers must limit how much comp time employees can accrue. Under the FLSA, non-exempt employees can accrue up to 240 hours of comp time, which is equivalent to 160 hours of overtime.
- Use of comp time: Employers must allow employees to use their comp time within a reasonable time period. They cannot force employees to use their comp time at a specific time or deny them the opportunity to use it.
- Cash-out: Employers must offer employees the option to cash out their unused comp time at the end of the year or when they leave the company. If employees do not use their comp time within the time limit, the employer must pay them for the unused time.
Conclusion
Comp time can be a useful policy for employers to offer their employees, as it can provide flexibility and work-life balance for employees and cost savings for the employer. However, it’s important for employers to ensure that they comply with the FLSA guidelines and any applicable state laws when implementing a comp time policy.