Compensatory Time Off

Compensatory Time Off (often called comp time) is paid time off given to employees instead of overtime pay. When employees work beyond their normal hours - especially in public sector jobs - they may earn comp time hour-for-hour or at a premium rate instead of receiving monetary overtime compensation.

While private employers in the U.S. are generally restricted from offering comp time in place of overtime pay under the Fair Labor Standards Act (FLSA), government and public sector employers may legally offer it under specific guidelines.

Key Facts

• Alternative to Overtime Pay: Comp time is typically granted at 1.5 hours for every 1 hour of overtime worked (for non-exempt employees), matching the overtime premium pay rate.
• Public Sector Use: Permitted mainly for state and local government employees under FLSA regulations and is not typically legal in the private sector for non-exempt workers unless specifically allowed by law.
• FLSA Requirements:
  
  • Must be voluntarily agreed to by the employee
  • Comp time must be tracked accurately and used within a reasonable time frame
  • There’s often a cap (for example, 240 hours) on how much comp time can be accrued
• Limitations in Private Sector: Most private-sector employers must provide monetary overtime pay, not time off, for hours worked beyond 40 in a week. Exceptions may apply for salaried exempt employees, but not for hourly non-exempt employees.
• Documentation Is Key: Policies should clearly define eligibility, accrual rules, usage limits, and approval processes. Employers must maintain accurate recordkeeping to stay compliant.

1. What is compensatory time off (comp time)?

It’s paid time off given to an employee instead of overtime pay, usually earned when working beyond standard hours. It’s common in the public sector.

2. Is comp time legal for private employers?

Generally no, not for non-exempt (hourly) employees. The FLSA requires overtime to be paid in money, not time off. There are limited exceptions and state-level variations.

3. How is comp time calculated?

Most often at a 1.5:1 ratio - for example, 4 hours of overtime would earn 6 hours of comp time, matching the time-and-a-half overtime rate.

4. Can comp time expire?

Yes. Many employers or state laws require comp time to be used within a set period (e.g., within a year) or risk forfeiture. Federal rules may also require payout under certain conditions.

5. What’s the difference between comp time and regular PTO?

• Comp time is earned by working overtime hours
• PTO (paid time off) is part of a benefits package and can be used regardless of overtime worked