Also known as compensatory time, comp time is a flexible way of allowing employees to take paid time off in exchange for overtime hours worked instead of receiving overtime pay. While comp time is common in many non-exempt employment situations, it is import to know who is eligible for comp time, when it may not be legal, and how to implement a comp time program successfully.
Let’s review the basics of comp time and answer all these important questions.
How is Comp Time Calculated?
Normally, when employees work more than their 40 hour work week they are legally entitled to overtime pay for each hour over that limit at a rate of 150 percent their normal pay. Comp time is always calculated at at least a one hour worked to one hour comp pay ratio, anything less than this may not be legal.
According to the Office of Personnel Management of the United States, most workers are also eligible to receive payment instead of time off for their comp time if they do not use the comp time hours within a specified time period. Comp time is also accrued and built up, but there are using limits to how much comp time can be accrued in a specific time period.
Who is Eligible for Comp Time?
The truth is that comp time laws and regulations vary by state and therefore who is eligible can vary depending on where a specific business is located. Various resources like this handy state by state interactive map provided by Workplace Fairness can be used to learn about the agency that governs workplaces laws like workers comp in specific states and how to contact them. In general, however, comp time is only available to non-exempt workers as those working under exempt status are not allowed to work overtime in the first place.
What is the Difference Between Exempt and Non-exempt Employment?
Exempt and non-exempt employment are classifications that are required by the Fair Labor Standards Act (FLSA). This important piece of legislation guarantees certain rights to hourly (non-exempt) workers like minimum wage and overtime. Comp time is an extension and adaptation of these rights. Exempt workers either work for a set salary or for a commission, like in some sales jobs, or as independent contractors, and are therefore “exempt” from the standards provided by the FLSA. Comp time is legal under the FLSA under certain conditions as long as it used for eligible employees as explained above.
Do Government Employees Get Comp Time?
Many government employees do indeed receive comp time instead of overtime pay. Keep in mind however that this is agreed to ahead of time and varies according to state law. According to the U.S. Department of Labor, government employees cannot be paid less than one and a half hours of comp time for every hour of overtime actually worked. The Department of Labor also sets limits on how much comp time can actually be accrued in one year. While 240 hours is the standard for most government works, law enforcement officials, firefighters and emergency personnel can accrue up to 480 hours.
How Do I Set Up Comp Time For My Employees?
Once a company has established that their non-exempt employees are eligible for comp time in their state according to law, they can set up a comp time system in their company. Then they must make sure the employee both wants and has requested a comp time off scheme in lieu of standard overtime pay. Mandatory comp time policies are used in rare cases but most of the time are illegal. Then employer should draw up a standard agreement between employer and employee that sets forth all the details about the comp time policy before any work is performed. Keep in mind that the employee still has the right to demand to be paid for their comp time worked instead of taking time off and at the time of termination of employment has the right to be paid for all the comp time they have accrued.
What if My Employee is Not Eligible for Comp Time?
The truth is that even if both worker and employee want comp time in exchange for overtime hours worked, it still might not be legal in their state or situation. The reasons for this are various but in general the FLSA is trying to discourage employers from overworking employers and encourage them to hire more employers when the need more work done. However, they can still work out a way to give your employees more flexibility and rework their schedule that allows for more days off even though the same amount of time is worked. For example, an employee who wants an extra day off can work four ten-hour work days to make up their 40 hour work week and then have a three day weekend.
Tracking Comp Time with Homebase
Comp time can be a win win situation that makes both employer and employee happy, but it must abide by the law and local regulations. Once approved, companies can track comp time just like regular pay and overtime through the easy to use employee scheduling software provided by Homebase. Handling everything from scheduling, pay sheets and time clocking Home Base is also the best way to automate comp time tracking for businesses of all sizes.
Remember, this is not official legal advice. If you have any concerns, it’s best to consult an employment lawyer.