BPHR’s Director Lisa Salcido, SPHR, SHRM-SCP provides answers to your pressing HR questions.
Question: Can we offer our employees “comp time” instead of paying overtime?
Answer: The Department of Labor defines compensatory or “comp” time as “paid time off the job that is earned and accrued by an employee instead of immediate cash payment for working overtime hours.” Providing time off to non-exempt employees in lieu of overtime pay may sound tempting and your employees may even prefer this arrangement, but it is currently only allowed in the public sector (state and local government agencies).
Private-sector businesses (including private-sector nonprofit agencies) cannot substitute compensatory time off for overtime pay. Non-exempt employees working for private employers must be paid overtime for all time worked in excess of 40 hours in a week. Under current law, overtime earned in week one cannot be adjusted in week two by providing compensatory time off. For example, a non-exempt employee who works 44 hours this week (4 hours of overtime) cannot be paid for 40 hours worked and given 4 hours of time off next week to replace the payment of 4 hours of overtime.
Granting non-exempt private-sector employees compensatory time in lieu of overtime hours worked, “averaging hours” from work period to work period, and other strategies to avoid overtime pay is not permitted by the Fair Labor Standards Act (FLSA)…Yet!
There is a new bill that has passed in the House and has been received by the Senate for further consideration. If signed into law, the “The Working Families Flexibility Act” will permit private sector employees to “bank” overtime hours to later be used as compensatory time. Balance Point will continue to monitor the bill’s progression in the Senate and update you with details should the bill become law.
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DISCLAIMER: The material presented on this page is for informational purposes only and does not constitute legal advice or legal opinion.