Comp Time: Definition and Examples

One of the ways that you might earn similar advantages for working longer hours at work is through compensatory time off. Knowing your rights in regard to overtime is crucial. Educating yourself on the topic of comp time and how it can affect you is one way to increase the likelihood that you will receive the appropriate payment. Read further to know more about the comp time policy for exempt employees and salaried employees. The differences between comp time vs overtime. Let’s dive in!

What Is Comp Time?

Comp time, also known as compensatory time, is the practice of employers providing paid time off to make up for hours worked above the regular timetable. While some businesses have formalized rules to allow for variable work schedules, others have successfully used compensatory time on a case-by-case basis to deal with schedule shifts. A typical workweek for an employee can consist of 32 hours. They put in a total of 40 hours that week since their management made them remain late every day. Eight hours of compensatory time off will be granted the following week.

Employers must follow tight guidelines for compensatory time to be a lawful option for non-exempt employees who are legally entitled to overtime compensation. A company’s use of compensatory time to avoid paying overtime may be in violation of the Fair Labor Standards Act. Employers can use compensatory time to maintain a stable labor budget, and workers can benefit from a more manageable workload and more flexible hours if administered effectively and in accordance with FLSA guidelines.

What Are the Three Examples of Comp Time Off?

The number of hours of accrued leave that employees are permitted is also subject to employer policy.

#1. Overtime Compensatory Time Off

If both the company and the employee agree, this sort of leave is given in lieu of cash compensation for extra labor.

#2. Regular Compensatory Time Off

Hourly comp time exempt employees may be provided on a regular basis by some employers. The amount of time an employee can take off in the form of regular compensatory leave is often capped.

#3. Special Compensatory Time Off

Employees can accrue this kind of leave in conjunction with holidays or specific administrative leave options. If a person works overtime, their company may grant them paid time off to celebrate certain holidays.

Comp Time Policy

In the US, the comp time policy is governed by stringent criteria established by the FLSA. Here is the comp time policy:

Except in the cases expressly mentioned below, non-exempt workers are eligible for overtime pay at a rate of 1.5 times their regular rate. Remember that the FLSA provides significant exclusions, particularly for people employed in certain professional, administrative, executive, outside sales, and computer-related occupations.
Workers in the public sector are an exception. They are entitled to “time and a half” (i.e., 90 minutes of earned time off for every hour worked) in the form of compensatory time off rather than overtime compensation. However, any collective bargaining agreement, memorandum of understanding, or other instrument or policy must govern compensatory time off.
Public safety, emergency response, and seasonal workers can accrue 480 compensatory hours. Overtime compensation at the standard rate must be provided for any work performed after that time.
The cap is 240 hours of compensatory time off for any other form of job. Overtime compensation at the standard rate is due for any time worked over that threshold.
Employees can take compensatory time off whenever they choose as long as it doesn’t impede work.

However, even if the organization is not subject to the FLSA, employers should evaluate any collective agreement.

Purpose of Comp Time For Salaried Employees

If an exempt employee works more than their allotted hours, [Company Name] will pay them back with compensatory time off at a rate equal to their usual pay. The provisions of the Fair Labor Standards Act (FLSA) created a standard to assess overtime exemption applied to all employment within [Company Name]. Positions are considered nonexempt if they do not pass the exempt test. Overtime pay is available to nonexempt workers, but they cannot accrue paid time off.

Granting Comp Time For Salaried Employees

Comp time for salaried employees is provided to those in exempt roles. Comp time for exempt employees is not mandated by law, and [Company Name] is under no duty to provide any. If an exempt worker is compelled to work more than 40 hours per week due to a special project, on the weekends, or on a holiday, their supervisor may choose to compensate them with compensatory time off. Comp time for salaried employees will be awarded on an hourly basis.

The department manager who signs the timesheet must approve comp time for exempt workers. Comp time will be awarded once the management signs off on the employee’s timesheet. The timesheet should be accurately filled out by all employees.

Using Comp Time

Employees who request comp time must receive it within a fair timeframe. Management may refuse comp time if it causes major department issues. Also, managers might require employees to utilize comp time off when balances are high.

Exempt employees must use compensation time earned within two months of the workweek. There is a cap of 40 hours on compensation time. The maximum number of compensatory hours an employee can receive in a two-month period is 40.

Who Can Earn Comp Time?

Although private companies rarely employ compensatory time, they have the option to do so. Salaried, exempt workers are eligible to accrue compensatory time. Exempt workers whose base salary is the same regardless of how many hours they work may receive compensatory time off. Police, fire, and emergency medical technicians (EMTs) typically need compensatory time to make up for their shifts’ unpredictability and length. Full-time workers are more likely to receive compensatory time off than part-timers who work irregular weeks and earn overtime.

Some jurisdictions allow non-exempt hourly workers to bargain for comp time. Comp time laws might allow for either universal availability or strict prohibitions. Research your state’s laws on compensatory time off before broaching the subject with your employer.

Comp Time vs Overtime

Comp time is an alternative to overtime pay for people who work over 40 hours per week. Some companies offer comp time, which is equal to overtime compensation. When an employee works more than 40 hours in a week, they are entitled to overtime pay. When workers put in overtime hours, they are paid 1.5 times their regular hourly rate.

Both comp time vs overtime compensation are ways of rewarding workers for their dedication and hard work. If an employee works more than 40 hours in a week, they are entitled to 1.5 hours of paid time off. This is done to compensate them fairly for their time, as it is equivalent to the value of time-and-a-half overtime compensation.

Since the worker’s total hours worked were less than the threshold of 40 required to qualify for overtime pay, the company could legally award just one hour of compensatory time for every hour of overtime worked. The employee is entitled to either time and a half for the five extra hours worked or 7.5 hours of compensatory time if they work 45 hours instead of 40. Comp time is often determined by subtracting 40 hours from the total number of hours worked and then multiplying the resulting number by 1.5.

Differences between Comp Time vs Overtime

The following are the differences between comp time vs overtime:

Comp Time Off	Overtime Leave
When a supervisor grants an eligible worker compensatory leave, the worker receives pay for the time off.	If you work overtime, you can take time off instead of getting paid more.
Hour for hour, compensatory time off is given.	One and a half times the number of hours worked in excess of 40 in a workweek constitutes overtime pay.
Any eligible worker who is forced to work due to the aforementioned situations is entitled to one hour of compensatory time off for every hour worked.	Overtime is granted at the discretion of the department head or supervisor and upon their initiative.
Comp time can be accrued by a non-exempt worker only if their weekly physical hours of labor are 40 or less. A non-exempt worker is subject to the Overtime Leave policy if they clock in for more than 40 hours in a workweek.	Only non-exempt, full-time classified employees are eligible for overtime pay.
When a holiday falls on a regularly planned off day, non-exempt workers will receive compensatory time off.	Wage workers are never eligible for paid leave and must be compensated monetarily for any overtime hours worked.
If an employee works fewer than eight hours on a holiday, they may be eligible for compensatory time off equal to the number of hours they worked.	Overtime Pay is not available to exempt workers.
If the supervisor designates the exempt employee as a “essential employee” or if the employee is compelled to work on a holiday or on an official office closing day, the exempt employee will be entitled to compensatory leave.	Overtime accrued at the time of an employee’s separation from the university will be paid out at the employee’s hourly rate of pay at the time of separation OR at the employee’s average hourly pay rate over the last 3 consecutive years of employment, whichever is greater.
You can take compensated time off for any reason with compensatory leave.	An employee’s accumulated Overtime Leave will be carried over in the event of a promotion, transfer, or demotion to another nonexempt classified position at JMU.

Limitations to Compensatory Time

It is crucial that companies adhere to specific guidelines and restrictions when offering compensatory time in lieu of extra compensation. The most important rules that apply to you and your employer are as follows:

Union leaders negotiate compensation plans on behalf of their members.
The conditions of your compensatory time must be agreed upon between you and your employer before it can be added to your paycheck.
If you work more than 40 hours in a week, your employer will pay you overtime at 1.5 times your regular hourly rate.
comp time vs overtime is taken at the same time.

Time Limits for Exempt and Non-exempt Employees

Comp time is capped at 480 hours per year for public safety professionals, some healthcare workers, emergency workers, first responders, and seasonal government employees. The annual cap for other government workers is 240 hours. If it does not significantly impact business operations, your employer must let you use your accrued compensatory time. Overtime rates will be applied instead of comp time for any hours worked beyond these caps.

Comp time accrued by federal employees (whether exempt or nonexempt) must be used within 26 pay periods or be lost forever. If an exempt worker has accrued comp time that is about to expire, their employer can choose to either pay them for the time’s worth or ask them to surrender it. Employers are obligated to compensate workers for time off that they are unable to use due to circumstances beyond their control. Employers are required by law to pay out any accrued but unused comp time to non-exempt workers.

How Do You Explain Comp Time?

Comp time, or compensatory time, is when an employer grants an employee paid time off in exchange for overtime performed.

What Is an Example of Comp Time?

An average work week for an employee could be 32 hours. They put in a total of 40 hours that week since their management made them remain late every day. Eight hours of compensatory time off will be granted the following week.

What Is the Difference Between Comp Time vs Overtime?

Paid time off from work can be taken for any reason with the help of compensatory leave. Instead of being paid extra money for working overtime, employees might instead take time off. Time off for working more than 40 hours in a week is paid at the rate of time and a half.

Is Comp Time Paid or Unpaid?

Comp time, or compensatory time, is a kind of employee compensation in which employers provide paid time off in lieu of cash payment for overtime worked.

Does Comp Mean Salary?

The sum of the base salary and the amount of any financial perks offered by your employer constitutes your annual remuneration, to put it simply. Annual incentives like commissions or bonuses are included.

Does Comp Time Turn Into Overtime?

There are two main types of overtime: those that occur on a regular basis and those that occur only seldom. For irregular or infrequent overtime, employers may offer comp time off instead of monetary compensation. If you have a flexible work schedule, you will only be eligible for compensatory time for regularly planned overtime.

What Happens to Comp Time When You Quit?

If an employee resigns and has accrued but not used their comp time off, the company must pay them out at the moment of termination.

Final Thoughts

Employers often do not allow employees to cash out compensatory time off in place of overtime compensation. Unlike regular vacation time, which occasionally entitles workers to payment if it is not used, this type of vacation time is not refundable. When an employee leaves a company, they may be entitled to compensation for any wasted vacation or sick time. To find out how your firm handles compensatory time off, you should consult a corporate representative or HR.