· Tricia Tan  · 6 min read

The Difference Between Comp Time & Overtime

In the United States, when it comes to work, the usual arrangement is that you have to render a set amount of time per week.

Typically, employees work 40 hours a week—but what happens when they go over that set limit?

How will the payment work now? Will they be compensated for the extra hours they clocked in?

The answer is a resounding yes, but the question now is, will it fall under comp time or overtime pay?

Let’s discuss the difference between the two in this post.

What is comp time?

What precisely is comp time?

When an employee works more than 40 hours in a workweek, compensatory time is the practice of giving them paid time off (PTO) rather than paying them extra.

For example, let’s look at a grocery store worker. Suppose the week before the three-day weekend was jam-packed.

A typical grocery store worker puts in 10 hours weekly for that particular time. However, with comp time, the worker can get paid time off to run some errands for himself rather than receiving pay for those overtime hours.

Some companies have a comp time policy that provides employees with paid time off (PTO) equal to the overtime compensation they would ordinarily earn.

But can you do it in every circumstance and for every kind of employee?

Whether an employee is entitled to comp time depends on several variables, including whether they are exempt or non-exempt, whether they work in the public or private sector, and whatever federal or state rules are in effect where the company is located.

The Fair Labor Standards Act (FLSA) contains particular regulations and requirements that employers must follow when deciding whether to offer comp time instead of overtime compensation to their staff.

Government agencies are typically the only businesses permitted to give employees compensation.

This includes organizations like:

  • Law enforcement agencies
  • Firefighters and other fire safety personnel
  • Responders to emergencies
  • Staff members who took part in seasonal activities

Other employees working for state and local offices can only accrue up to 240 hours of comp time, whereas these employees can accrue up to 480 hours.

According to the Department of Labor, under specific circumstances, local, state, or federal government agencies can accrue comp time at a rate of no less than 1.5 hours for each hour of overtime an employee works.

Additionally, only exempt workers who make at least $35,568 annually, are not paid overtime and receive an annual salary are eligible for comp time.

Since non-exempt workers are entitled to overtime pay, the FLSA prohibits them from accruing comp time to prevent them from inadvertently stacking it with overtime pay.

What is overtime pay?

The remuneration you receive for working past the regular hours is called overtime pay.

For instance, if your typical workweek is 40 hours and you are qualified for overtime compensation, working 50 hours in a given week entitles you to 10 hours of overtime pay.

Your weekly income and the number of hours you work determine whether you are eligible for overtime.

According to the terms of your employment contract, certain companies may impose overtime.

Where there is additional work to be done, others might propose it as an option. You could set your expectations by knowing how your workplace handles overtime.

Other forms of overtime include the following:

1. Time Off In Lieu (TOIL)

Some firms offer their workers time off in lieu of pay (TOIL) to compensate for lengthy hours. Together, the employee and the company plan this time off.

2. Voluntary Overtime

Voluntary overtime is when your employer gives you overtime labor that you can accept or reject without incurring fees. Employees that agree to the additional work are compensated for it with overtime pay.

3. Mandatory Overtime

Your contract’s terms and conditions contain stipulations regarding mandatory overtime. However, your employer must still comply with several laws and guidelines.

What’s the difference between comp time and overtime?

It is crucial to grasp the significant distinctions between comp time and overtime pay to ensure you correctly adhere to state and federal requirements.

This assists you in avoiding any fines or other legal ramifications from the local, state, or federal government.

Suppose the employee and their management agree to the employee receiving comp time on a specific day before that work week begins. In that case, state and government agencies may use comp time instead of overtime pay.

For instance, a government worker may negotiate with their employer to put in more time that week in exchange for the day off on the following Monday if they have a big project due in two weeks and know they’ll be staying late and working extra hours late that week.

Another situation where an employee might receive paid compensation is when non-exempt and exempt government workers put in extra time to finish a challenging collaborative assignment.

The non-exempt worker would be compensated for the extra hours worked with overtime pay.

The exempt employee would earlier arrange with their employer to get paid time off, an amount equal to the overtime compensation the non-exempt employee receives, to maintain justice between the two.

There are ways for you to overcome legal obstacles while also giving your staff the freedom to strike a healthy work-life balance.

For instance, if your business is located in a state that doesn’t mandate daily overtime, you can enable staff members to request an extra hour of work Monday through Thursday.

The employee would work four hours on Friday in exchange for a half-day off. They would continue to work a 40-hour work week and not receive any overtime pay.

The employer would gain from flexible weekly scheduling since they would avoid paying the overtime charge.

The benefit for the workers is that it allows them to take a few hours off each week to take care of personal business or spend more time with their family.

Such chances are limited, so it is crucial to understand both state and federal overtime requirements.

To summarize

Your leadership group needs to ensure that there is a written policy that outlines the requirements for staff attendance.

Employees can combine their work and personal lives when their employer allows them time off and flexible weekly scheduling that enables them to make up for unplanned, brief absences.

Comp time in place of overtime, however, is not legal. There are plenty more strategies to keep your staff content without the risk of legal repercussions or issues with the Department of Labor.

Ensuring your HR team is on top of organizing these strategies is a wise move to keep your employees happy and company compliant.

Hezum, a complete HR solution, can streamline your HR processes such as onboarding and time-off management.

With this platform, your HR team now has even more flexibility and time to keep track of overtime and create strategies to ensure employees experience genuine work-life balance.

Want to learn more about Hezum’s solutions? Visit the website today.

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