What Exempts an Employee from Comp Time

Comp time, short for compensatory time, is used in place of overtime pay. Instead of someone being paid 1.5 times their base pay for overtime, they are permitted 1.5 times as much time off in the future. However, comp time is not an option for all employees.

When is an employee exempt from comp time?

If an employee works extra on one day, they can request in writing to be permitted to take off later that week. Comp time rollover is then avoided. In California, employees must be allowed to take 1.5 hours off in comp time that week for each hour of overtime worked. The comp time cannot be rolled over to the next week unless the employee requests it in writing. If the employee cannot get off makeup time off, the employer must pay the overtime pay rate for time worked over 40 hours a week.

Federal regulations state that comp time can only be used if it is in the same pay period as when someone worked overtime. Comp time cannot be saved up like vacation time and used months later.

A one to one ratio of paid time off is not allowed under the Fair Labor Standards Act for hourly employees.

Salaried employees are typically exempt from comp time. Salaried employees are professionals, and they are paid the same per pay period regardless of how many hours are worked. Employers may institute a form of comp time, such that an employee who works 45 hours one week may work 35 the next, as long as all time is within the same pay period.

However, the employee will not receive overtime payment if they averaged more than 40 hours a week and may be required to use paid time off for any time under the 40 hour a week floor if it is not offset by comp time.

Employers should be careful of allowing salaried employees "comp time" to offset extra hours worked. This may create confusion in their status as salaried and lead to demands for hourly pay and overtime pay rates when they work more than 40 hours a week.

Comp time can only be used when employees work overtime irregularly, i.e., overtime is not an expected part of the job. If employees regularly work 50 and 60 hour shifts, they are not eligible for comp time under the FLSA.

Contract employees like day laborers are not eligible for comp time in most cases, but that should be specified in the contract. Freelancers paid by the job are not eligible for comp time. It does not matter if they work 4 hours a day or 14 hours; they are paid when the task is done or as project milestones are reached.

Part time employees are defined as those working a standard work week of less than 39 hours a week. Employees who are scheduled to work 30 hours a work week are not eligible for comp time if they work 35 or even 39 hours a week, though the Affordable Care Act defined full time as 30 or more hours a week. An employer can reduce someone’s next shift to prevent the employee from working a set number of hours like the 30 hour a week threshold required for medical insurance under Obamacare, but this is not considered comp time.

Comp time is sometimes not permitted. Many states state that employees must be paid overtime if they work more than eight hours in a 24 hour period, no matter how many hours are worked that week or for the pay period. Wage employees cannot be forced to take compensatory time instead of receiving paid overtime.