Comp Time or Overtime?
Most people are familiar with the term “comp time,” or “compensatory time.” A “comp time” program exists when an employer gives a “credit” for future paid time off to an employee instead of wages for hours worked. Comp time usually is applied to overtime hours, and the “credit” given is frequently one hour of “credit” for one hour of work. When comp time is used like this for overtime, it creates two problems: failure to pay wages and failure to pay time and one half for hours worked over forty in a work week.
Although this is a common practice, in most situations it is an illegal pay practice. If you are a private employer (i.e., non-governmental or public), there is no comp time for non-exempt employees. If a non-exempt employee works for more than forty hours in a week, the employee is entitled to pay at the rate of 1 ½ times his or her regular rate of pay for each hour worked over forty.
As the recent lawsuit alleging the illegal use of comp time against Bank of America reminds us, even if it seems like “everybody else is doing it,” comp time is still an illegal pay practice. We expect comp time to be a focus of the Department of Labor—and probably plaintiffs’ attorneys—in the coming years. Carefully review your pay practices to ensure that, if you are a private employer, your non-exempt employees are receiving monetary “comp” at a rate of 1 1/2 times their regular rate of pay for any hours worked in excess of 40 during one week.