Some great folks at the New England Graduate Accounting Studies Conference (NEGASC) last week challenged me about the concept of “comp time.”  I stated that “comp time” is not a legal term in the private sector, only in the public sector. Private sector means all of us who don’t work directly for the government.

“Comp time” (compensatory time) is only permissible if the employee works for an entity defined as a public agency by the Fair Labor Standards Act (FLSA), and that basically means anyone who works for the state or federal government, such as town officials, other elected officials, firefighters, and law enforcement personnel. The definition of public agency does not cover any private companies who do the same type of work as public companies.  For example, employees who work for the Town of Pleasantville Ambulance Service work in the public sector and are entitled to “comp time.”  Employees who work for Ivan’s Ambulance Company, which is privately owned and operated, are working in the private sector and are not entitled to “comp time”.

The FLSA states that an employer who requires or permits an employee to work overtime is generally required to pay the employee at a rate of not less than time and one-half their regular rates of pay for hours worked in excess of 40 hours in a workweek.   Unless the employee is specifically exempted (normally known as exempt-salaried employees who meet both the duties test and the new salary minimum), all hourly or non-exempt employees who work in the private sector get overtime pay.  (If your company’s current policy is to pay overtime after 8 hours worked in any given workday, I would strongly encourage you to change your practice to hours worked in excess of 40 in a workweek.)

It is illegal to give employees time off instead of paying them or to pay them straight time when they have worked overtime.  What employers may do is to give their employees flexibility within a given work week so that their total hours don’t exceed 40.  A good example is when Gertrude has a doctor’s appointment on Tuesday at 3:00 p.m. She needs to leave at 2:30 and her normal workday ends at 5:00.  Instead of taking her normal, one-hour lunch break, Gertrude only takes 30 minutes for lunch each day during that week, working the other 30 minutes which makes up the 2.5 hours she needs for Tuesday’s appointment.  However, Gertrude can’t earn those extra hours the week before and “float” them into her time off the following week. That’s not allowed in the private sector. The flexibility of the work schedule is only allowed during the current scheduled work week.

If “comp time” is a common term in your private-sector world, I would encourage you to eliminate the practice.  If you let your employees “use up” their “comp time” as quickly as is feasible for your organization, and not let them accrue any more, then you will be in compliance with that portion of the FLSA.  Reach out to me at paula@hrcompliance101.com if you need help with this process.