Glossary

What is compensatory time off?

Compensatory time off, commonly referred to as "comp time," is a system where employees receive paid time off instead of overtime pay for extra hours worked. It allows employees to take time off at a later date as compensation for working beyond their regular schedule. Comp time is typically used in public sector jobs, as private employers must comply with strict labor laws regarding overtime compensation.

Compensatory time vs. overtime

While both compensatory time and overtime acknowledge hours worked beyond the standard 40-hour workweek, their compensation methods differ:

• Compensatory time: Provides paid time off at a later date instead of monetary compensation.
• Overtime: Offers cash payment, typically at one and a half times the regular hourly rate.

Who is eligible for compensatory time off?

Eligibility for compensatory time off depends on factors such as federal and state laws, employment classification, and the sector in which the employee works.

• Nonexempt employees: Under the Fair Labor Standards Act (FLSA), nonexempt employees working in the private sector must receive overtime pay, not compensatory time. Employers offering comp time to nonexempt employees in lieu of overtime violate federal law.
• Exempt employees: Private sector employers may create compensatory time policies for exempt employees, though they are not required to provide it since exempt employees are not eligible for overtime pay.
• Public sector employees: Federal, state, and local government employees may receive compensatory time off at a rate of 1.5 hours for each overtime hour worked instead of overtime pay, subject to specific rules and limitations.

How does compensatory time off work?

Compensatory time off is calculated similarly to overtime pay, at a rate of 1.5 hours for every extra hour worked. For example, if an employee works 45 hours in a week, they are entitled to 7.5 hours of comp time for the additional 5 hours worked.

Employers must accurately track hours worked to calculate compensatory time and ensure compliance with labor laws. Employees can use accrued comp time as paid leave within the allowed time frame.

Key FAQs about compensatory time off

How is compensatory time off tracked?

Employers must maintain accurate records of employee work hours, including overtime eligible for comp time. The value of the comp time is equivalent to the overtime pay the employee would have received.

How can employees use compensatory time off?

The use of compensatory time off depends on state laws and company policies. Employees should coordinate with their employer to schedule time off and ensure it aligns with organizational needs.

How is compensatory time calculated?

Comp time is calculated by subtracting 40 from the total number of hours worked in a week and multiplying the extra hours by 1.5.

For example:

• Hours worked: 45
• Overtime hours: 45 - 40 = 5
• Comp time: 5 x 1.5 = 7.5 hours

Can compensatory time be paid out?

Comp time is typically offered in lieu of cash overtime payments. However, in some cases, such as termination of employment, employers may pay out accrued comp time in cash.

Does compensatory time roll over?

Comp time does not usually roll over. Employees must use accrued time within a designated period, as outlined by their employer or state regulations.

How can employees request compensatory time off?

Employees should submit a written request to use comp time. Approval depends on organizational policies and operational needs.

Benefits of compensatory time off

Compensatory time off offers flexibility to employees, allowing them to balance personal and professional commitments. It also helps employers manage overtime costs and maintain productivity while supporting employee well-being.

By implementing clear policies and maintaining compliance with labor regulations, organizations can create a fair and transparent system that benefits both employees and employers.