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

Compensatory time off (comp time) is when you receive paid time off rather than wages for extra hours worked.

In California, full-time non-exempt employees can receive comp time instead of overtime pay if four conditions are 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 240 hours,
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.¹

However, federal law generally forbids comp time arrangements for non-exempt employees of private companies. However, you may be able to get around this by taking your comp time in the same workweek you earned it.

Since many employers are simply ignorant of comp time rules, you should consult with a California employment law attorney yourself to make sure your comp time arrangement does not run afoul of the law.  Keep reading to learn more about how comp time works in California.

What is the cap on comp time?

California’s 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.²

How much is comp time?

One overtime hour worked equals 1.5 hours in paid time off. If the overtime hour of work was entitled to a higher rate, like double time, then one overtime hour worked equals two hour in paid time off.

You can ask to use your accrued comp time within a “reasonable time” following your request.

You generally can cash out your comp time that has accrued for two or more pay periods, but at your regular rate of pay. 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.³

What is the point of comp time?

Comp time is a wage replacement option when you work extra hours during the workweek. 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.

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.

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.

There must be a written contract for you to receive PTO in lieu of wages for overtime work.

Is federal law different?

Yes. The federal Fair Labor Standards Act (FLSA) forbids comp time for non-exempt employees of private employers.

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.” That additional compensation can be based on hours worked beyond the normal workweek and paid out as:

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

Meanwhile, the FLSA allows public employers to pay their full-time workers with comp time at a rate of no less than 1.5 hours of PTO for each hour worked under certain conditions.⁴

How is comp time different from make-up time?

Comp time is working extra hours one workweek in exchange for PTO in a later workweek 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, overtime rules are not implied. Make-up hours are paid at your regular rate of pay.

In California, make-up time is allowed if the following three things are true:

1. Your boss signs off on your written request for make-up time;;
2. You do your make-up time on the same week where you missed your time;
3. You get overtime pay if you end up working more than 11 hours in a workday or more than 40 hours in a workweek.

Note that you can request make-up time for recurring obligations up to four weeks in advance.⁵

Additional Resources

For more information, refer to the following:

• Keeping Track of Comp Time is a Full-Time Job – Labor Law Journal.
• Work Hours, Wages, and Vacation Leave – ILR Review.
• Exemptions from the overtime laws – Official website of the California Department of Industrial Relations (DIR).
• What is an Exempt Employee in California? – Simple explanation by a popular hiring firm.
• How to file a wage claim – Instructions provided by the California Labor Commissioner.

Legal References