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The Difference Between Comp Time and Overtime Pay

Understanding the difference between comp time and overtime pay, and knowing your rights can help protect yourself from unfair wage practices.

Compensatory time is illegal except if you work for a public employer such as a federal, state, or city government job. Unfortunately, some private employers pay compensatory time instead of overtime, cheating employees out of hard-earned money.

What Are Comp Time and Overtime Pay?

Compensatory time and overtime pay are two ways employers compensate employees for working additional hours beyond their regular work schedule. Employers and employees must be aware of specific overtime and comp time regulations. These regulations can vary based on federal and state labor laws, which is why employees should consult an experienced employment attorney to recover unpaid overtime wages. Compensatory time and overtime pay also have industry-specific regulations and are determined by individual employment agreements.

It violates FLSA regulations for a private company to use compensatory time to avoid paying their employees time-and-a-half overtime pay.

The Main Difference Between Compensatory Time and Overtime Pay

Overtime pay is paid out to employees as additional wages on their regular paychecks. Employers pay overtime like all other wages and employees can legally recover unpaid overtime wages.

Comp time is employee time off for use at a later date, subject to the employer’s policies and applicable laws.

Overtime Pay

Overtime pay is monetary compensation that employees receive for extra hours they work above a 40-hour work week.

Under federal and state wage laws, the overtime rate is at least 1.5 times the employee’s regular hourly wage for each hour worked above 40 hours. For example, a non-exempt employee earning $10 per hour would be eligible for an overtime rate of $15 per hour ($10 x 1.5 = $15). Employers must also include additional compensation into an employee’s regular rate of pay for overtime calculations such as bonuses, shift differentials, and spiffs.

Non-exempt employees are legally entitled to overtime pay under the Fair Labor Standards Act (FLSA) and state wage laws. Employees can bring a case on behalf of themselves and other employees to recover unpaid overtime wages.

Overtime Exempt Employees

Some employees, like executive, administrative, professional, and outside employees, are exempt from overtime laws.

Job titles don’t determine an employee’s exempt status but rather job duties the employees actually perform. Exempt employees usually earn a salary. You should contact an employment attorney if you believe your employer has misclassified you as an exempt employee not entitled to overtime pay.

Comp Time

Compensatory time is a form of time off granted to public employees in lieu of overtime pay. Instead of an employer paying an employee for the overtime hours worked, the employee is given time off work.

Compensatory time is typically calculated at a rate of 1.5 hours of time off each hour of overtime worked. Some states require employers to allow employees to use compensatory time within a specific timeframe. Exempt and non-exempt employees often have up to 26 pay periods to take their compensatory time. At this point, they may earn a payout for it or forfeit it.

Federal and state wage laws prohibit private employers from using compensatory time instead of overtime pay. The FLSA and state wage laws restrict the usage of compensatory time off, and it’s against the law for private businesses to offer it to employees in place of overtime pay.

Compensatory time is more common in the public sector where the law explicitly permits it. Eligibility for compensatory time varies depending on the employer’s policies and whether the employee falls under the categories where it is allowed.

When compensatory time is implemented correctly and legally, it can benefit both employers and employees. Employers can keep their labor budget consistent, and employees can find a good work-life balance.

Rowdy Meeks Legal Group LLC: We Will Help You Get the Pay That You Deserve

Unless you are specifically classified as an “exempt” worker, your employer must pay you overtime wages or provide compensatory time if you are a public employee for any hours you work over 40 hours in a workweek.

At Rowdy Meeks Legal Group LLC, we fight for employee pay rights, and we have the experience, resources, and track record to help you get the pay you earn.

Contact us for a free case evaluation if you are concerned about having comp time while losing out on overtime wages.