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Compensatory time, often called comp time, is paid time off given instead of cash overtime pay. Under the Fair Labor Standards Act (FLSA), this option is generally limited to state and local government employers. Eligible nonexempt employees must earn comp time at a rate of one and a half hours for every overtime hour worked.
For state and local government employers, comp time generally requires an agreement or understanding with the employee before the overtime work is performed. Depending on the workplace, that agreement may be part of a collective bargaining agreement or an arrangement with the individual employee.
Most eligible public employees can accrue up to 240 hours of comp time. Employees working in public safety, emergency response, or certain seasonal activities may accrue up to 480 hours. Once an employee reaches the applicable limit, additional overtime generally has to be paid in cash. Employees must also be allowed to use accrued comp time within a reasonable period after requesting it unless doing so would unduly disrupt operations. When employment ends, unused comp time must be paid out based on rules established under the FLSA.
Private employers generally can't use comp time instead of paying overtime to nonexempt employees. Under the FLSA, covered nonexempt employees must receive overtime pay for hours worked over 40 in a workweek. That means an employer can't simply bank extra hours from one week and give the employee time off in a later week instead. The Department of Labor's overtime guidance provides more detail on these requirements.
There are a few practices that can look like comp time but aren't the same thing. An employer may adjust a nonexempt employee's schedule within the same workweek so the employee doesn't exceed 40 hours. Exempt employees may also receive additional time off because they generally aren't entitled to FLSA overtime. Other pay arrangements, such as a Belo plan, follow their own specific requirements.
Generally, no. Covered nonexempt employees must receive overtime pay for hours worked over 40 in a workweek. An employer can't bank those overtime hours and replace the required pay with time off in a later workweek.
Most eligible public employees can accrue up to 240 hours. Employees working in public safety, emergency response, or certain seasonal activities may accrue up to 480 hours. Once the applicable limit is reached, additional overtime generally must be paid in cash.
An employer can adjust an employee's schedule within the same workweek, as long as the employee doesn't work enough hours to trigger overtime requirements. Exempt employees may also receive additional time off without it being considered statutory comp time. The important distinction is that overtime earned by a covered nonexempt employee generally can't be carried into a later workweek and exchanged for time off.