Most workers are familiar with compensatory or comp time—the practice of employers offering employees time off from work in place of cash payments for overtime. What comes as a shock to many is that the practice is illegal in most situations. Under the FLSA, only state or government agencies may legally allow their employees time off in place of wages. (29 U.S.C. § 207(o).)
Even then, comp time may be awarded only:
according to the terms of a collective bargaining unit agreement or
if the employer and employee agree to the arrangement before work begins.
When compensatory time is allowed, it must be awarded at the rate of one-and-a-half times the overtime hours worked—and comp time must be taken during the same pay period that the overtime hours were worked.
Many employers and employees routinely violate the rules governing the use of compensatory time in place of cash overtime wages. However, such violations are risky. Employees can find themselves unable to collect money due them if a company goes out of business or they are fired. And employers can end up owing large amounts of overtime pay to employees if they get caught by the labor department.
a. State Laws
Some states do allow private employers to give employees comp time instead of cash. But there are complex, often conflicting, laws controlling how and when it may be given. A common control, for example, is that employees must voluntarily request in writing that comp time be given instead of overtime pay—before the extra hours are worked. Check with your state’s labor department for special laws on comp time in your area. (See the appendix for contact information.)
b. Alternative Arrangements
Employees who value their time off over their money may feel frustrated with the letter of the law preventing them from taking comp time. If you are in this boat, you may have a few options for getting an arrangement that feels like comp time but is still within the letter of the law.
You may be allowed to take time off by rearranging your work schedule. This is legal if both of the following are true:
The time off is given within the same pay period as the overtime work. You are given an hour and a half of time off for each hour of overtime worked.
One way is to subtract the time during a single workweek.
But you are not confined to an hour-for-hour trade. You can also take time-and-a-half pay in one week, then reduce your hours the next week so that your paycheck remains constant.
