Compensation time replaces overtime pay with time off, but strict legal limits apply across private and public employment. Employee eligibility depends on FLSA status, agency policies, and state law, with potential penalties for unlawful compensation practices.
By Brad Nakase, Attorney
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After putting in more hours, some businesses let their staff members take time off. Compensation time, or “comp” time, is the term used to replace overtime pay. Surprisingly, this approach is typically prohibited by law because of concerns about workplace exploitation. For workers who genuinely appreciate comp time, there are potential solutions. Read on to find out more about comp time.
The phrase “comp time” could be familiar to you. Comp time is a practice in which an employee receives more time off in a week in exchange for overtime pay dedicated to the preceding busy/demanding workweek. In case you work in a private company and you are a non-exempt worker, you could be entitled to overtime allowances. But you may be surprised to know that it is illegal in many instances.
It might be against the law, for instance, to work 56 hours in one week and then take two 8-hour days off in another week to make up the extra 16 hours. For the sixteen hours you put in during the first week, you ought to receive overtime compensation.
In certain states, private employers are permitted to provide comp time to workers in lieu of overtime compensation. The laws of each state vary, and there may be complicated situations in which workers are eligible for comp time. You can get in touch with the state’s wage & hour/labor standards violation agency if you have any queries about comp time within your state’s legislation.
Comp time may be offered to employees by state or federal organizations in lieu of overtime pay, but only if union representatives have reached an agreement, or the government employee and employer consent to the comp time structure prior to the start of the additional work.
Only employees who are required to work overtime hours within flexible work schedules may receive comp time from their employers in lieu of regular overtime work. Additionally, for sporadic or irregular overtime labor, comp time may be authorized in lieu of overtime compensation.
Yes. Your status under the Fair Labor Standards Act indicates your entitlement to be given remuneration in case of overtime work beyond 40 hours per week.
Exempt employees are not eligible for overtime compensation. The FLSA only allows exempt workers to receive a basic salary.
An employee who isn’t exempt must be given overtime if they work over forty hours a week. They are entitled to one and a half times the regular wages they earn in the additional time they work.
It depends. When an exempt employee works irregular or sporadic overtime, agencies may force them to take compensation time rather than overtime, but only if their basic pay rate is higher than mandated. For wage-earning staff members, a government entity may not mandate comp time as a replacement for mandatory overtime compensation.
Yes. Within twenty-six pay periods after the pay period during which they earned it, the exempt worker must spend their accumulated compensation time. The earned comp time may be paid at the overtime rate if it is not utilized within the twenty-six pay periods or if the employee moves to another agency. Otherwise, they risk losing the unused comp time off, unless there was an uncontrollable service-related event that prevented them from using the time.
The cumulative compensation time must be used within 26 periods of pay from the pay period in which it was earned by an FLSA nonexempt worker. Employees must get overtime compensation for accrued paid time off if they do not use it within twenty-six pay periods or if they transfer to a different agency prior to the 26th pay period.
Finding out that you are not eligible for compensation time, irrespective of whether you and the company both desire it, can be distressing. Overtime regulations serve as a deterrent for firms that choose to overwork workers rather than hire staff when necessary.
The ideal system is one that would be flexible and would allow the workers to choose the option that is better for them (overtime compensation or compensated time off). Nevertheless, the working conditions and hours of most employees are not very controllable. They are unable to make a choice that is not optimal for the company.
If the companies are ready to accept their employees’ requests for time off rather than overtime compensation, they have options. You and your manager might rearrange your work schedule during the week in which you put in extra hours.
For example, a person who typically works eight hours Monday through Friday must put in many 10-hour days in order to fulfill a deadline. Given that overtime compensation only begins to be paid when an employee has worked above 40 hours in a given workweek, the employee may work 10 hours a day from Monday through Thursday while having Friday off. No overtime would be owed, and the employee would still receive payment for a 40-hour workweek.
Receiving overtime compensation in one week and then cutting back on hours the following week to maintain a steady paycheck is another method to accomplish the same goal.
As previously mentioned, a lot of designated comp time plans are illegal. If the company’s comp time policy violates the law, you might be able to sue them for unpaid pay. For additional details on how to submit a claim for underpaid wages, continue reading below.
You should speak with a local government agency or attorney to find out how to proceed if you think you have a case against your company. Even if you don’t have a lawyer, there are state and federal authorities that can assist you, even if the amount of money owed to you may be too modest for an attorney to take on your employer.
Small claims courts are another alternative if the authorities you contact do not provide you with the assistance you require. You might be able to file a claim against the company in small claims court more quickly and affordably because of the small sum of money involved, and you won’t require legal representation.
The Wage and Hour Division (US Department of Labor) has the responsibility to enforce regulations of the FLSA.
To check whether a company is complying with the law, Wage & Hour enforces the FLSA through investigators stationed throughout the United States. These investigators perform investigations and collect data on wages, hours, & other employment circumstances or practices. They may also suggest modifications to employment practices in order to bring a company into conformity when they discover infractions.
Terminating an employee or treating them unfairly in any other way for submitting a complaint or taking part in an FLSA legal action is illegal.
Willful infractions can result in criminal prosecution and a $10,000 fine for the offender. A second conviction could land you in jail. A civil money fine of as much as $1,000 may be imposed on employers who knowingly or frequently fail to pay the minimum wage.
Shipments of commodities manufactured in violation of the FLSA’s specific minimum wage standards, overtime compensation, child labor, or minimum wage are prohibited in interstate commerce.
Recovery of unpaid wages is possible in many different ways, and each method has its own procedures.
The reimbursement of back wages can be handled by a government unit, the Wage and Hour Division.
If an employer knowingly violated the statute, the Secretary of Labor can take action for back wages and another penalty known as “liquidated damages”. It can be equivalent to the back pay amount (basically double the damages).
To prevent anyone from breaking the Fair Labor Standards Act, which includes illegally withholding overtime and the appropriate minimum wage, the Secretary of Labor may ask for an injunction.
You can either submit a complaint with the Wage-Hour Division for wages that remain unpaid under the FLSA, or you can file a suit in court on your own (which could require you to engage an attorney).
Do not wait to submit a claim by getting in touch with your state agency or the Wage and Hour Division. You have a limited amount of time to pursue charges for unpaid wages. Unless an employer intentionally violates the law, in the event that a three-year statute of limitations applies, you must bring a suit in court within 2 years of the infraction for which you are requesting back wages in order to maintain your claim according to federal law.
However, don’t wait until your permitted time limit is almost up to submit your claim because you may have additional legal claims with tighter limitations. It is not required to have an attorney in order to submit your claim to state or federal administrative agencies, though it could be beneficial to speak with one before doing so.
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