“Comp Time” – What You Need To Know

Everyone has probably heard of “comp time” and understands it to be when an employer gives paid time off for past hours worked. Oftentimes, employers implement comp time policies so as not to have to pay employees overtime wages. However, what most people don’t know is that comp time policies are usually unlawful, unless they meet very stringent criteria. In fact, the federal law that requires overtime pay for certain employees, called the Fair Labor Standards Act, does contain any provision that expressly allows or permits the use of comp time instead of paying overtime. However, the U.S. Department of Labor, in an internal publication for its wage-hour investigators called the Field Operations Handbook says that comp time in lieu of overtime may be permissible in limited circumstances. Very few courts have decided this issue as applied to private sector employees. Hence, it seems quite possible that a court could reject the DOL's position and determine that "time off" plans are impermissible because they are not specifically authorized by the FLSA. For a private sector employer to have a possible lawful comp time policy, the following conditions must be met:

1. An employee must be given paid comp time-off in the same pay period when the overtime hours were worked. For example, if an employee works gets paid every two weeks and works 50 hours in one week (10 hours of overtime), then in the second week he must be given the comp time.
2. The comp time off must be provided at a 1.5 rate. Using the example above – if the employee worked 50 hours in week one (10 hours of overtime), then in the second week the employee can work only 25 hours and then must be given 15 hours of paid time off.

Comp time is more broadly permitted for governmental employees. Congress, in 1985 specifically amended, the Fair Labor Standards Act, to permit compensatory time credit as a substitute for overtime payment for government work. Congress did so because local and state governments especially need predictable budgets. Comp time for government workers must be credited at one-and-a-half times the regular rate. Further, it must be agreed to, either in writing or verbally, by the public employees involved.