What_Is_Compensatory_Off

In any job making the right decisions w.r.t the rights afforded to you through regulations, laws and policies is the best way to ensure an appropriate work-life balance. Even managing finances is often highly facilitated through these.

One such benefit afforded to employees is compensatory time off. Full awareness about compensatory time off does not only refer to knowledge of compensatory leaves but also to that of alternative monetary compensation. Curious? Well, let’s find out!

What Is Comp Time or Compensatory Time Off?

Comp time stands for Compensatory time and is an optional way of paying employees for extra working hours. As we gain from the name itself, comp time is reimbursement in the form of extra time off, instead of overtime pay. To put it simply, compensatory off is the time-off the employees get for their extra time hours, rather than getting additional time pay. 

compensatory off

To put it in a concise definition, companies with compensatory time off policies recompense their workers in the form of paid time off (PTO) as an alternative to paying time and a half in overtime pay. Here, it is essential to understand the meaning of time and a half. It is 50% more than what an employee gets as his regular pay. 

This implies that the company is liable to pay the employee his regular rate of pay and an additional half of that for every overtime hour he clocks in. It may sound complicated but the overtime pay can be calculated by multiplying their regular rate by 1.5. 

It means, clocking additional hours will earn an employee the luxury of paid vacation contrary to the reimbursement in payment. 

The Fair Labor Standards Act (FLSA) directs the guidelines of compensatory time.

Exempt vs Non-Exempt Employees

A key difference between these two types of employees is if they get overtime pay or not. The term “exempt” means exempt from being paid overtime.

The employer does not necessarily have to pay for overtime done by exempt employees. Exempt workers must get salaries. The main categories of exempt employees are:

  • executive
  • professional
  • administrative
  • computer
  • outside sales

The U.S. Department of Labor implemented norms that were implemented from January 1, 2020 and said:

administrative, executive and professional employees, computer and outside sales employees can be exempt, if they comply with the following criteria:

  • Employees receive a salary rather than being paid per hour
  • Employees make at least $684 per week or $35,568 annually

Non-exempt employees on the other hand, are eligible for overtime. If they have worked more than 40 hours in a given week, it is compulsory for the employer to compensate them for every extra hour worked.

The Difference Between Salaried and Hourly Employees

Another factor that determines whether you get comp time or not is if you’re a salaried or an hourly employee.

So what’s the difference between a salaried and an hourly employee?

Hourly employees are paid for each hour they work. That’s why it is pretty much obvious that they receive overtime pay if they work more than 40 hours a week. The calculation of the compensation is simple- i.e. if they’re paid $10 an hour and they have worked 10 extra hours, they get $100 extra (10×10).

Technically, this is not overtime pay (unless it’s in a contract), because instead of getting a monthly salary for fixed hours, you “bill” or “get paid” for every hour.

Unlike hourly employees, salaried ones have a fixed compensation. Such employees usually have other company-provided benefits. Many salaried employees are exempt from the overtime rules. In some cases, salaried employees are legally non-exempt. That’s why it’s necessary their employers pay them time and a half for any hours worked over 40 hours in a given week.

Now, the question arises- ‘Why do some salaried employees get to be non-exempt?’

It depends on their salary. By the laws of FLSA, salaried employees are earning less than $684 per week ($35,568 per year) are considered non-exempt.

Eligibility for Compensatory Time

Whether or not you get compensatory time is dependent on:

  • Whether your employment is exempt or non-exempt
  • Whether you’re a salaried or hourly employee
  • And whether you work in the private or public sector.

To be clear, exempt employees do not get qualified for comp time – they are only eligible for their base salary. But it is compulsory for employers to pay non-exempt for overtime (if they have worked more than 40 hours in a given week).

Yet, there’s one exception:

Exempt employees can get compensatory time if it’s mandatory they work more than 40 hours per week. 

Usually, that happens during special projects or on weekends. In that case, their supervisor may choose to grant comp time off.

However, comp time rules are not the same for the private and public sectors.

FLSA regulations dictates that comp time for non-exempt, salaried employees is not allowed in the private sector. On the other hand, comp time is legal in the public sector.

State or local government employees may get comp time off under specific conditions. It’s compulsory that their rate is at least one and one-half hours for each hour of overtime.

Note: it is essential to keep a track of the number of hours worked in overtime, if you are afforded comp time.

How to Keep a Track of Hours/overtime Hours Worked?

Whether you’re a salaried employee or one that’s paid on an hourly basis, organizing your time & work and handling your projects properly has no alternative. It takes effort when you’re starting off, but once you have streamlined these basic necessities, all that matters is that you follow it like a habit.

Here’s your checklist for the same:

  • Sync your time entries: Logging in work hours is critical especially if you’re paid by the hour. You gotta know ‘How much?’ before the green flows in. Let’s say you’ve started tracking your time on the computer and after a few hours went for lunch. You forgot to stop the timer. Now, if your phone clock is synced with your computer clock, you can pause the timer from anywhere.
  • Keep a check on your idle time: Oftentimes you forget to clock in the idle time on your device when you’re actually busy strategizing for work. It is one thing to want to be fair to your employer and be honest with your work hours, but it is also important to remember that things like planning and strategizing counts as work.
  • Targets and reminders: if you haven’t logged enough hours, set up a reminder system for yourself to track time.

Comp Time- What’s More?

There are a lot of regulations revolving around comp time. The best way to know more about it is by understanding it with respect to your employment type and occupation. For example, as an employee of the Office of Personnel Management, here’s where you can find more info about your comp time: https://www.opm.gov/policy-data-oversight/pay-leave/pay-administration/fact-sheets/compensatory-time-off/

The official FLSA site is the right place to place to go and learn about general comp time rules and regulations. The US Department of labor also has useful information on this matter

Comp time w.r.t others

Overtime

As mentioned earlier, if you as a full time employee have worked over 40 hours in any week, all those extra hours will count as overtime. Also as mentioned earlier, employers must pay their employees time and a half for any hours worked over 40 hours a week.

Instead of receiving overtime pay, employees can get compensatory time for their overtime hours.

Flex time

Compensatory time is quite different from flex time. Comp time is only and only with respect to employees working overtime. Flex time however is a type of benefit afforded to employees. It essentially means that employees have the freedom to choose their working hours.

Credit hours

Credit hours can be earned by employees by voluntarily choosing to work overtime. Comp time, on the other hand is afforded when an employee has to work overtime.Employees with flexible hours can use their credit hours.

PTO

PTO or paid time off is essentially another term for vacation, sick days or personal time. It means exactly what it says. An employee who is afforded paid time off can take days off from work without their salary or wages being deducted.

Compensatory Off Time Laws

California has a unique set of regulations for overtime in this state.

Where does it get tricky to calculate? Overtime in this state is calculated both after 8 hours of work per day and 40 hours per week.

For example, if you have worked for 10 hours on a Thursday, you’re entitled to two hours of overtime. You worked 46 hours in total in the week before- this means that you’ll get paid for 6 hours overtime. 

The overtime rates in California are are pretty much based on the regular rates, except for the difference between hourly and salaried employees:

The regular rates for hourly employees are the same as what  they receive per hour during a 40-hour workweek. Under special circumstances when they receive two different rates, the overtime rate is estimated based on their average. For example, if you get two rates- $30 & $40 per hour, your overtime rate would be {$35 (40+30)/2}.

Salaried employees – The overtime rates of salaried employees can be found out by dividing the annual salary by 52 weeks in a year, and 40 work hours in a week (e.g. $52,000/52/40 = $25).

Compensatory Off expiration

Comp time does expire. Employees have 26 pay periods from the time they have earned the comp time to redeem it. It is customary for employees to get overtime pay for unused comp time after the said 26 pay periods

The rules are the same for the exempt non-exempt employees.

What should you do if you don’t get comp time pledged to you?

If your employer does not give you deserved comp time, then the right thing to do is file a claim against your employer. If you’re not familiar with this process, you should contact a government agency or a lawyer.

You can get in touch with federal and state governments to help you out in such cases.

Conclusion

We hope that this comprehensive guide on comp time was enough to give you clarity on the subject matter. Comp time may seem like a complex phenomenon for freshers, but once you have familiarised yourself with all its benefits and pitfalls, you will find that it can actually be used to make your work life easier. Moreover it is useful in helping you establish a healthy work-life balance

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