“Comp Time” – What is it and how does it work?

Posted on March 10, 2023

Compensatory time off, or comp time, is when you receive paid time off rather than wages for extra hours worked. Federal law forbids comp time for non-exempt employees of private employers. Private employers can voluntarily offer comp time for exempt employees. Public employers can sometimes offer comp time instead of overtime pay, subject to strict regulations. State laws may have different rules.

What is compensatory time off?

Comp time is a replacement for wages that would have to be paid to you for extra hours worked during the work week. Rather than the wage, you would receive paid time off (PTO) to be used during later work weeks. It is often used to replace overtime pay. However, it can also be used to compensate part-time employees who work extra hours.

For example: Claire is a town clerk. She usually works 40 hours per week. On Monday, a coworker calls out sick and Claire’s boss asks her to work 2 extra hours. In exchange for the extra work on Monday, Claire receives paid time off rather than wages.

Comp time is regulated by both state and federal law. The federal Fair Labor Standards Act (FLSA) only permits public employers to use comp time.[1] Some states, like California, have employment laws that allow private employers to offer it.[2]

Regardless, you are still entitled to at least the minimum wage for hours worked.

Can I get it if I work full-time for a private company?

The FLSA only allows public employers to pay full-time workers with comp time. However, regulations promulgated by the U.S. Department of Labor (DOL) state that comp time can be paid to full-time exempt employees at private employers in the form of “additional compensation.” This often requires the comp time to be provided under a different label.

Non-exempt employees

Non-exempt employees are those that are protected by state and federal wage and hour laws that require:

• minimum wage, and
• overtime pay.

All employees are non-exempt, unless they fall into a specific type of exemption. They are generally hourly employees, but can be salaried employees, as well.

Under the FLSA, non-exempt employees of private sector employers cannot be paid in comp time. The law only allows comp time for public employers.[3]

Exempt employees

Exempt employees are exempt from overtime laws under state and federal labor law. To be exempt, you have to meet:

• a salary threshold, and
• job duty requirements.

Several common types of exempt employees are those who fall under the:

• administrative exemption,
• computer professional exemption,
• executive exemption, and the
• professional exemption.

FLSA regulations allow private employers to pay “additional compensation” to full-time exempt workers in some situations.[4] That additional compensation can be based on hours worked beyond the normal work week. The compensation can take the form of:

• a flat sum payment,
• a bonus payment,
• straight-time hourly wage,
• time-and-a-half pay for overtime hours, or
• paid time off.[5]

Note that the FLSA does not require private employers to make these payments. Exempt employees are not entitled to overtime pay and can work extra time beyond the normal 40-hour work week.

If you think that your employer is misclassifying you as exempt in order to get overtime work without paying for it, you can file a misclassification lawsuit.

Is comp time an option in the public sector?

Yes, the FLSA allows public employers to pay their full-time workers with comp time. Even this option, however, has conditions attached to it.

Public employees work for the state or any of its subdivisions. They can be employees for the:

• federal government,
• state,
• county,
• town,
• village, or
• any other government agencies.

Some examples of these government employees are:

• public school teachers, administrators, or other employees,
• firefighters,
• police officers,
• parks and recreation employees, and
• town clerks.

Public employers can only pay these workers in comp time if:

• it is pursuant to the employment contract or collective bargaining agreement, or
• the employer and employee agreed to the arrangement before the work is performed.[6]

Once accrued, you have the right to use comp time within a reasonable period after requesting it, so long as it does not unduly disrupt your employer’s operations.[7]

There are caps on how much comp time you can accrue. Generally, the cap is 240 hours. However, if you perform the following types of work, you can accrue up to 480 hours of comp time:

• public safety activities,
• emergency response activities, or
• seasonal work.[8]

Any work performed in excess of these caps must be paid in overtime pay.^[9]

Any comp time that full-time public employees receive has to be paid at the overtime rate, or 1.5 times the number of hours that you worked. For example, if you work an extra hour of overtime one day, you have to receive comp time of an hour and a half. If you worked 8 extra hours in a week, you are entitled to 12 hours of comp time.[10]

When you quit or are terminated from your position, you can cash out your comp time. It is paid at whichever rate is higher:

• your average regular pay rate over your last 3 years of employment, or
• your final regular pay rate.[11]

What if I work part-time?

If you are a part-time employee of a public employer, you can receive comp time for extra hours worked. That comp time, however, does not have to be provided at 1.5 times the number of extra hours that you worked, so long as you did not work more than 40 hours in the work week.[12]

Is it only available to replace overtime pay?

Comp time is often used to replace overtime pay. However, it does not have to be. For example, comp time does not replace overtime pay if:

• you are a part-time worker,
• you are an exempt employee, or
• it would not make you work more than 40 hours in a week.

Employers frequently use comp time to:

• fill unforeseen staffing gaps,
• create a flexible work schedule, or
• meet an increased demand for services.

Employees may prefer comp time to working overtime at a higher hourly rate in order to get a better work-life balance.

Are there special rules for public safety employees?

Public safety employees can accrue more comp time than other public workers. While other public employees can build up 240 hours of compensatory time, public employees who perform the following types of work can accumulate 480 hours:

• emergency response,
• public safety, and
• ^[13]

If your job regularly consists of a mixture of this and other types of work, you can accumulate 480 hours of comp time.[14]

Emergency response work includes the following types of occupations:

• dispatchers,
• ambulance workers,
• rescue workers, and
• emergency medical technicians (EMTs).[15]

Public safety work includes the following types of jobs:

• firefighters,
• police officers, and
• other law enforcement personnel.^[16]

Seasonal activities are those that involve work during periods of significantly increased demand, which regularly recur. These generally would lead to accruing more than 240 hours of comp time. Some potential examples include:

• road repair crews,
• snow plow drivers, and
• tax preparation professionals.[17]

How is this different from make-up time?

Comp time is working extra hours one week in exchange for PTO in a later week or pay period. Make-up time is working extra hours one day to cover for an absence earlier in the week.

Because make-up time merely shifts around working hours in the same week, it does not implicate federal overtime rules. Federal overtime rules require time-and-a-half pay for hours worked in excess of 40 in a work week. Make-up hours are paid at your regular rate of pay.

What is the law in California?

In California, all full-time non-exempt employees can receive comp time in lieu of overtime pay under state law.[18] However, 4 conditions must be met:

1. comp time is authorized by a collective bargaining agreement, the employment contract, or some other written agreement entered into before the performance of the work,
2. you have not accumulated comp time in excess of an applicable cap on comp time,
3. you have requested, in writing, comp time in lieu of overtime pay, and
4. you are regularly scheduled to work at least 40 hours in a work week.[19]

The cap on comp time for all employees is 240 hours. If you have reached this amount, you are entitled to an overtime wage for subsequent work performed.[20]

All comp time has to be paid at least at 1.5 times your regular rate of pay in California. If the hour of work was entitled to a higher rate, like double time, you are entitled to that amount in comp time.[21]

You can cash out your comp time, but at your regular rate of pay.[22] At termination, you are entitled to financial compensation for your comp time at the higher of:

• your average regular rate of pay for the last 3 years, or
• your final regular rate of pay.[23]

Legal References:

[1] 29 USC 207(o).

[2] California Labor Code 204.3 LAB.

[3] 29 USC 207(o)(1).

[4] 29 CFR 541.604.

[5] Same.

[6] 29 USC 207(o)(2)(A).

[7] 29 USC 207(o)(5).

[8] 29 USC 207(o)(3).

[9] Same.

[10] 29 USC 207(o)(1).

[11] 29 USC 207(o)(4).

[12] 29 CFR 553.28.

[13] 29 USC 207(o)(3).

[14] 29 CFR 553.24(a).

[15] 29 CFR 553.24(d).

[16] 29 CFR 553.24(c).

[17] 29 CFR 553.24(e).

[18] California Labor Code 204.3(a) and (h) LAB.

[19] California Labor Code 204.3(b) LAB.

[20] California Labor Code 204.3(c) LAB.

[21] California Labor Code 204.3(a) LAB.

[22] California Labor Code 204.3(c)(2) LAB.

[23] California Labor Code 204.3(d) LAB.