Can Salaried Employees Receive Comp Time?

Comp time, which is often referred to as compensatory time off, is paid time off given to salaried employees in place of overtime pay. What are the legality concerns in doing this or offering some sort of “flex“ time off? U.S. labor laws require employees to work forty-hour work weeks. Comp time is taken from the same pay period any extra hours were worked.

Any extra hours worked over the standard forty must be paid either as overtime or in comp time. Federal law dictates employers need to ensure that comp time is comparable to what they would have paid an employee for overtime. Failing to do so can result in heavy fines from the DOL. For businesses that have flexible schedules, accrued comp time can be paid in a number of ways – a flat sum in form of a bonus, straight-time hourly rate, one-half times the regular rate of pay, and paid time off, just to name a few.

The FLSA (Fair Labor Standards Act) permits non-exempt employees to receive comp time; however, there are a few things you need to keep in mind in doing this in order to avoid serious department of labor violations. The FSLA has provisions for comp time for some public and private sector employees based on the state, even though the guidelines are different in each sector.

Furthermore, there are some differences in state law and federal law when it comes to comp time, so do your research to ensure you aren’t accidentally mishandling payment of your hourly employees. Employers need to familiarize themselves with these guidelines or seek the help of a professional.

Who Qualifies For Compensatory Time?

Because non-exempt employees are usually protected by FLSA regulations and are required to be paid overtime pay for any hours surpassing the typical 40-hour work week, they are not eligible to receive any form of comp pay. According to the FLSA, exempt employees do not qualify for overtime pay; however, they are often awarded some form of comp time for excess number of hours worked.

In order for a salaried employee to qualify for comp time, they must be non-exempt and work in the public sector. Comp time is commonly awarded in the public sector, and these are usually employees protected by unions. The majority of employees in the private sector do not offer comp time to exempt employees because they do not want their salaried employees to fall into the “hourly work” mindset. They would rather their employees focus on properly completing jobs and reaching goals, regardless of the amount of time it takes.

Public employers reserve the right to restrict comp time to only specific employees, positions, or schedules (i.e., holidays, weekends, emergency situations). However, the non-exempt employee must agree ahead of time to receiving comp time in lieu of overtime pay.

By law, public non-exempt employees are only allowed to accrue a maximum of 240 hours of comp time. The only exemption to this rule is if the employee performs “a public safety activity, an emergency response activity, or a seasonal activity.” These employees are allowed to accrue up to 480 hours of comp time.

Employers are required to allow their employees to use their comp time “within a reasonable period” after requesting it, as long as the requested time off does not interrupt or affect the processes of a public agency. Employers are not permitted to force non-exempt employees to give up or exchange their cash overtime into something else.

Is Compensatory Time Offered to Employees in the Private Sector?

Comp time for non-exempt, salaried employees is not allowed in the private sector. However, the FSLA permits comp time in both the private and public sector for exempt employees. Non-exempt employees in the private sector must be paid for all overtime hours worked according to FSLA regulations.

Can Comp Time Be Paid for Exempt Employees?

Although there are regulations regarding how to award comp time for non-exempt employees in the public sector, comp time for exempt employees can be awarded in any way the employer chooses. Since the FLSA does not require employers to offer “comp time,” employers are also able to require the employee to cash out their comp time after leaving employment or even institute a “use it or lose it” policy if they choose. Keep in mind, though, that laws vary from state to state, so consult a professional before making any official determinations in order to avoid inadvertently breaking a regulation.

How to Avoid the Confusion

In the public sector, it is recommended that private employers call “comp time” something else to avoid confusion for both the employee and employer. Many employers refer to this as flex time or bonus time. Once again, be sure that you have properly classified your exempt employees.

In short, salaried employees can receive comp time if they work for the public sector, are classified as non-exempt, and work beyond 40 hours per week.  If you are unsure of whether or not you should be paying your employee’s comp time or overtime pay, then it is best to consult a professional who is familiar with the FSLA policy for your state.

Remember – the Wage & Hour Division of the U.S. Department of Labor handles issues with overtime rates and comp time. Make sure you’re protected, and your employees time is accounted for. The last thing you want is to bring law enforcement down on your business.

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