Is ?Comp Time? Legal?

Generally, no, ?comp time? is not legal.? Employers must pay overtime in the form of wages with the exception of state and local government entities.? The only employers who can pay compensatory time off in lieu of overtime wages are state and local government entities per Section 7 of the Fair Labor Standards Act and Title 29 of the Code of Federal Regulations, Part 553.? All other overtime must be paid at time and one-half an employee’s regular rate of pay for all hours actually worked in excess of 40 in any one work week.

There are instances when an employer can legally use comp time, but it cannot involve overtime.? Some employers will give ?comp time?, hour-for-hour, in specific instances.? For example, if an employee works an overnight shift, a weekend, or holiday as a special circumstance, the employer can give that employee “comp time” in the days following as an incentive for picking up an undesirable shift.? This applies when hours worked are under 40.? If hours worked exceeds 40 hours for a given week, then an employee must be paid overtime in wages at the time-and-a-half rate.

Even government entities that are allowed to pay for overtime using ?comp time? in lieu of wages still have to compute that time at the time-and-a-half rate. Consider the following example: An employee worked 41 hours during a given week.? The employer pays the employee for 40 hours and gives him 1.5 hours of paid comp time.

For exempt employees, salaried employees who are not entitled to overtime, an employer, while not required to, may set up a ?comp time? plan.? This is not a conflict with the regulation because exempt employees are not compensated for overtime through wages. ?29 C.F.R. ?553.28

Check out the US Department of Labor’s Wage Hour Division. They can be reached at www.dol.gov, or at 1-800-4US-WAGE.