Compensatory Time (commonly referred to as "comp time") is defined as paid time off which is earned and accrued in lieu of financial compensation when overtime is required. Comp time isn’t for everyone. The use of comp time in place of overtime is limited by the Fair Labor Standards Act (“FLSA”). The FLSA governs wage and hour laws in the United States. Under the FLSA, private sector employers must pay their non-exempt employees at an overtime rate of 1.5 times their regular hourly rate for all hours worked in excess of forty (40) in a workweek. To qualify for exemption from overtime, employees generally must meet certain tests regarding their job duties and be paid on a salary basis at not less than $684 per week.
Comp time is only applicable to public sector employees. Under certain prescribed conditions, employees of state and local government agencies may receive comp time at a rate of not less than one and one-half hours for each overtime hour worked instead of cash payment for overtime. Private sector employees are ineligible for comp time. The use of comp time as a means to avoid paying non-exempt employees overtime in the private sector is not permitted by the Federal Department of Labor and violates the FLSA. All non-exempt employees in the private sector must be paid overtime for the hours worked in excess of forty (40) per week.
Even though comp time is not authorized under the FLSA for private employers, that has not precluded employers from engaging in the practice of substituting time off for overtime pay. In theory, comp time allows employees to “bank” extra hours and use them as paid time off at a later date. While the idea of comp time might sound convenient, private-sector employers cannot legally use it as a substitute for overtime pay. The unavailability of comp time in the private sector is to ensure that employees are fairly compensated for their work and that employers do not manipulate work schedules to avoid paying overtime wages. Private sector employers cannot mandate that an employee accept comp time in lieu of overtime. Further, private sector employers cannot offer employees the choice of comp time or overtime.
If you work in the private sector and your employer has a comp time policy that denies you legally required overtime pay, you may have a wage violation claim. It is important for employees to maintain detailed records of hours worked. Documentation such as pay stubs, timecards, work schedules, and written communications with supervisors can serve as crucial evidence when challenging an employer’s illegal comp time policy. If your employer is violating wage laws, you have legal rights—and we’re here to help. Morgan Rooks PC is dedicated to protecting employees from unlawful wage practices and ensuring they receive the compensation they deserve.