Compensatory time off in lieu of overtime pay

[Guest David A. Harmon]

We have several employees wanting compensatory time off in lieu of being paid overtime. What are ramifications and how is it handled?

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David A. Harmon

[Guest CLKeown]

David -

You cannot grant "comp time" in lieu of overtime pay. The Fair Labor Standards Act states:

"A nonexempt private sector employee may not be granted compensatory time off in subesequent workweeks, in lieu of overtime pay, even if the employee prefers the compensatory time."

There are methods of "schedule balancing" that are acceptable.

Ex. 1 "X" Co. pays weekly, pay week is Monday - Sunday. Jane Doe works

M T W Th F S S Total

12 8 8 8 4 0 0 40

Jane's schedule was "rearranged" to give her a 40-hour work week.

Ex. 2 "Y" Co. pays biweekly. John Smith works 48 hours in the first week. "Y" Co. can give John time off in week two at one-and-one-half times the regular rate (8 x 1.5 = 12)to keep John's salary constant.

Week 1 40 hrs x $10 = $400

8 hrs x $15 = $120

Week 2 28 hrs x $10 = $280

Total $800

It is important to note that both of these examples give time off in the same pay period as the overtime. Additionally in example 2 the overtime is paid at 1.5 times the regular rate.

I hope this helps you.

Carole Keown

[Guest David A. Harmon]

Thanks CL for your response. It was most informative; however, I thought I read somewhere recently (wish I could remember where), that comp time CAN be given in lieu of overtime pay. Have you read anything on that?

[Guest CLKeown]

David -

The only think I can think of that you may have seen is the FLSA ruling on Public Sector Employers. The FLSA was ammended in 1985 to allow state and local governments to grant compensatory time in lieu of overtime pay.

Private Sector Employers are still prohibited from granting compensatory time in lieu of overtime pay.

Additionally, you may have seen a state or local regulation permitting "comp time" plans. However, when the FLSA and a State regulation are different the stricter of the two regulations is deemed to be applicable. Therefore, if your state allows "comp time" in lieu of overtime pay, the FLSA regulation is still the applicable standard as it is the stricter of the two regulations.

Carole