What is Compensatory Leave?

Compensatory leave, also known as compensatory time off or comp time, is a form of time off granted to employees instead of receiving overtime pay for extra hours worked.

It is a common practice in various industries and is regulated by labor laws, such as the Fair Labor Standards Act (FLSA).

Compensatory leave allows employees to balance their work schedules and personal lives by providing flexibility in how they are compensated for overtime work.

Key Elements of Compensatory Leave

Overtime Compensation vs. Compensatory Leave

Under the FLSA, non-exempt employees who work more than 40 hours in a workweek are entitled to overtime pay at an overtime rate, typically one and a half times their regular pay. However, instead of receiving overtime pay, some employees may choose or be required to take compensatory leave. This means they receive paid time off in lieu of overtime pay.

Eligibility and Accrual

Not all employees are eligible for compensatory leave. Non-exempt employees, who are typically hourly workers, can accrue compensatory leave for extra hours worked. FLSA-exempt employees, such as salaried employees, are generally not entitled to overtime compensation or compensatory leave. However, company policy may vary, and some organizations offer comp time to exempt employees as well.

Compensatory Leave Balance and Usage

The number of hours of compensatory leave an employee can accrue depends on the company’s compensatory leave policy and the applicable labor laws. Employees must keep track of their compensatory leave balance and coordinate with their supervisors to schedule time off. The hours of compensatory leave must be used within a certain period, often within the same pay period or fiscal year.

3 Benefits of Compensatory Leave

Flexibility in Work Schedule

Compensatory leave provides employees with flexibility in managing their work schedules and personal commitments. It allows them to take time off when needed without affecting their overall income.

Improved Employee Morale

Offering compensatory leave can boost employee morale and job satisfaction. Employees appreciate having the option to take time off as a reward for their additional hours of work, which can lead to higher productivity and engagement.

Cost-Effective for Employers

For employers, compensatory leave can be a cost-effective alternative to paying overtime rates. It helps manage staffing levels and reduce payroll expenses while still compensating employees for their overtime work.

Compensatory Leave Policies

Company Policy

Each organization should have a clear compensatory leave policy that outlines the rules and procedures for accruing and using comp time. This policy should be communicated to all employees and included in the employee handbook.

Accrual Limits

Policies should specify the maximum number of hours of comp time employees can accrue. For example, public agencies and law enforcement organizations often have specific guidelines for compensatory leave accrual.

Usage Guidelines

Employees should be informed about how and when they can use their compensatory leave. The policy should detail the process for requesting time off and any restrictions on usage during peak work periods.

Legal Considerations

Compliance with FLSA

Employers must ensure that their compensatory leave practices comply with the Fair Labor Standards Act (FLSA) and other relevant labor laws. This includes proper calculation of comp time and adherence to accrual limits.

Accessibility and Record-Keeping

Human resources departments must maintain accurate records of compensatory leave balances and ensure that employees have access to this information. Proper documentation helps avoid disputes and ensures transparency.

FAQs and Employee Education

Providing FAQs and educational resources about compensatory leave helps employees understand their rights and responsibilities. Regular training sessions can also help clarify any questions about the policy.


Compensatory leave is a valuable benefit that offers flexibility and fairness in compensating employees for overtime work. By understanding and implementing effective compensatory leave policies, organizations can enhance employee satisfaction, maintain compliance with labor laws, and manage their workforce more efficiently. For more detailed information on compensatory leave, refer to the Fair Labor Standards Act (FLSA) guidelines and consult your human resources department.

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