Comp Time Instead of Overtime Pay: What Private Employers Can and Cannot Do

The General Rule for Private Employers

Under the Fair Labor Standards Act, a covered non-exempt employee must be paid at least one and one-half times the regular rate for hours over 40 in a workweek. Time off in a later week is not the same as pay. The compensatory time option in 29 U.S.C. 207(o) is written for employees of public agencies, such as state and local governments, and requires an agreement. It is not a general option for private companies.

Time Off Later in the Same Week

The rule is about the workweek. If your employer lets you leave early on Friday so that you still work no more than 40 hours in that same workweek, no overtime hours were worked. The problem starts when the hours over 40 are worked in one week and the "payback" is promised in a later week.

Each Week Stands Alone

Under 29 CFR 778.104, each workweek is its own unit. An employer cannot average a 52-hour week with a 28-hour week and treat both weeks as 40 hours. This is also why banked hours, "flex time" across weeks and schedules that swing from long to short weeks can hide unpaid overtime.

• Comp time promised by a private employer

  Hours over 40 that are paid back with time off in a later week may still be owed as overtime pay.

• Averaging two weeks

  A two-week average of 40 hours does not remove overtime owed for a week over 40.

• Straight time for overtime hours

  Paying the normal hourly rate for hours over 40 leaves out the extra half of the rate.

• Late overtime

  Overtime generally must be paid on the regular payday for the pay period in which it was earned. See <a href="https://www.ecfr.gov/current/title-29/section-778.106" class="text-primary underline">29 CFR 778.106</a>.

If You Work for a Public Agency

Some state and local government employees can receive comp time at one and one-half hours for each overtime hour, under an agreement or understanding reached before the work is done. Limits apply to how much can be banked, and unused comp time has rules for payout. Whether your employer qualifies as a public agency depends on the facts.

If You Were Paid in Time Off

If you already took time off in place of overtime pay, you may still be able to claim the pay. A worker who wins an overtime claim can recover unpaid wages and an equal amount in liquidated damages, plus attorney fees, under 29 U.S.C. 216(b). The claim generally must be brought within 2 years, or 3 years if the violation was willful. For other ways overtime goes unpaid, read about off-the-clock work and when you are owed overtime.

What to Save

• The offer

  Texts, emails or posted notices that offer comp time or time off instead of pay.

• Time records

  Schedules, timecards, app logs and your own notes of hours worked each week.

• Pay stubs

  Stubs showing hours paid and the rate for the weeks in question.

• Time off taken

  The dates and hours you took off as "payback" and who approved them.

If you complain, the FLSA bars retaliation. See firing over a wage complaint.

Free Case Review

Whether comp time was legal depends on who your employer is, how your job is classified and how your weeks were scheduled. Our team can review your pay records at no cost, if you are eligible.