Time off plans are a great fringe benefit for employers to offer employees to foster employee engagement and retainment. When it comes to time off, there are numerous different types of plans. In this article, we will take a look at comp time and if an employer can use comp time with their employees.
What is comp time?
Compensatory time off, or comp time, provides nonexempt employees with paid time off to be used in the future instead of paying them overtime for hours worked in excess of 40 hours in a given 7 day period. Comp time is an acceptable practice for many government employers. However, the Fair Labor Standards Act (FLSA) generally does not permit private employers to offer comp time off in lieu of overtime pay for private-sector employers.
Can we use comp time with our employees?
This depends on your type of business. As stated above, nonexempt employees of a private employer may not be paid comp time. Private employers must pay overtime to nonexempt employees that work over 40 hours as opposed to offering comp time.
Government entities and public-sector employers could offer their employees comp time instead of paying overtime. There are certain limits for the amount of comp time that government and public-sector employees may receive. Police, fire fighters, emergency response personnel, and employees engaged in seasonal activities may accrue up to 480 hours of comp time. Other public-sector employees may accrue up to 240 hours.
If you are a private business, you could offer comp time off to your exempt employees as a reward for working more than their typical work week. This is considered a form of “flex time,” but there are downsides to doing this.
- First, your exempt employees may grow accustomed to being able to take time off when they work extra hours, and this may not be a desirable or sustainable practice for your organization.
- Second, tracking the hours of your exempt employees so you can reward them may be extra work for you and them.
- Third, formalizing a flex time system for exempt employees could create confusion about what they’re owed because it could create a perception that they’re compensated on an hourly basis.
Instead of creating a formal flex time system for exempt employees, it may be simpler to find other ways to reward them for working extra hours when needed.