Comp Time – Exchanging Overtime for Future Time Off

February 14, 2018 By
Comp Time

 

Comp Time, or Compensatory Time is the practice of allowing Overtime Hours to be exchanged or “banked” for future Paid Time Off.  This can also take the form of many alternatives.  One example is if employees are asked to attend a company meeting outside of their normal shifts, that this time is credited to a Comp Time Bank.

This practice of Comp Time has seemed normal for a long time due to the nature of the split in the actual law and “common practices” among Employers.

 

 Why Are People Using this?

The idea of “Comp Time” is veiled under the guise that it provides flexibility for the Employee.  Instead of taking extra pay they can have the convenience of having a day off in the future.  This practice is also put in place by some because they know the Employee will not actually use the time, and this “defers cost” to the Employer.  In some cases Employers put Comp Time into the same “not paid upon termination” policy as their normal PTO.

 

30% of Businesses Practice Comp Time

In a survey conducted by Tsheets , they found that out of 500 businesses surveyed 30% of the businesses were practicing some type of “Comp Time” policy.  According to researchers, they believe the number is actual higher since not everyone is willing to acknowledge the practice in writing.

 

The truth is that the majority of Employers that practice “Comp Time” in exchange for hours worked are in violation of FSLA laws…..AKA: Illegal

The reason goes back to standard overtime and hour rules within the FSLA.  You must pay for wages worked.  There are no exceptions.  Overtime is to be paid at one and a half times the normal rate, and every normal hour worked is to be paid at the normal rate.  Time cannot be withheld from an Employee or “pushed” to a future date.  “Banking” time for a “future” usage is considered withholding wages.

 

Public Sector Employees Excluded from the Law

Section 207 (o) of the FSLA, has an exclusion for public sector employees.  Public sector, to be clear are employees working for State, Local, Federal or other governing agencies.  These exceptions are also subject to other rules such as Collective Bargaining Agreements and more.  This was enacted in 1985 and has not been updated since.

 

Wait so No Comp Time?

Comp Time can only be used for Overtime Exempt Employees.  For example, if an Employer needs their Salaried Staff to work a Saturday, those employees would not be eligible for Overtime.  In exchange, or to boost morale, the Employer might offer Comp Time.  This is completely optional and is not required.

 

House Introduces Comp Time Bill

In May of 2017, the House of Representatives passed the “Working Families Flexibility Act” which would allow Employers and Workers to voluntarily agree to 1.5 hours of Comp Time for every hour of Overtime Worked up to a maximum of 160 hours a year.  The bill sits at the Senate and faces an uphill battle.

Opponents of the bill cite that Employers could abuse this and force Employees to take Comp Time instead of Overtime Wages.  Additionally, since the bill authorizes the Employer to approve when Comp Time is used, the “flexibility” the bill touts is subject to the will of the Employer.  Several Public-sector agencies have spoken out against the bill stating that Comp Time presents hardships for them to comply.

 

What Do You Do If You Currently Offer Comp Time:

If you are practicing Comp Time for Overtime eligible employees, per the FSLA – stop.  The penalties are big.  Very few States have exceptions / differences to the FSLA rules.

Willful violators can be fined up to $10,000, back wages and liquidated damages can be collected at twice the amount of wage owed and more.

 

If you are truly trying to offer flexibility through Comp Time, we suggest that you amend the Employee’s schedule in the following week that overtime is earned.  If he earned enough overtime equal to a full day, pay him the overtime and schedule him a day off in the following week.  If you are giving Comp Time instead for after hours Company Meetings, pay the employees for the time they attended.

 

To learn more about how Payroll Services LLC can help you check out our workforce management products.

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