Compensatory time or, as it is normally called, comp time is time worked by an employee beyond their required number of work hours. The required number of work hours is often calculated at 40 hours per week for exempt employees. In an organization that allows the accumulation of hours as comp time, it is calculated and recorded and employees expect some remuneration for the extra hours worked.
The hours accumulated are most often paid to the employee as additional time off from work, or comp time, which compensates the employee for the extra hours worked in excess of 40 hours. Comp time is paid instead of pay or overtime pay to exempt employees. It is illegal to offer comp time to nonexempt employees in lieu of overtime pay.
Comp Time for Nonexempt Employees
They cannot qualify for comp time because, under these regulations, they must be paid overtime for every hour worked in excess of their normal 40-hour workweek. "Compensatory time cannot be used as a means to avoid statutory overtime compensation."
Overtime pay begins when an employee works more than 40 hours in one workweek. Some states require that overtime pay starts when an employee has worked more than 8 hours in one day rather than more than 40 in one week.
Know the rules that govern your location before you fail to pay nonexempt employees properly. This is another instance in HR when knowing the employment laws specific to your state, country or jurisdiction is important in how you address comp time versus overtime pay. Don't put your company in the position of having to pay back wages.
Public Sector Phenomenon
Formally-recorded and calculated comp time is almost exclusively a public sector phenomenon. It occurs most frequently in a union-represented workplace.
Private-sector employers, who pay salaries to exempt employees for the accomplishment of a whole job, expect employees to devote the amount of time necessary to accomplish the organization's work required for their job.
Private-sector employers do not calculate hours worked over 40 by exempt employees nor call these hours available for comp time. Nor do private-sector employees expect to be paid comp time.
Employers fear that issuing comp time will instill in salaried employees an hourly mindset about work. This mindset is in direct conflict with the employer's desire that exempt employees adopt a mindset of goal achievement, job accomplishment, and doing whatever is necessary to complete the whole job.
What Can Private Sector Employers Do When They Don’t Calculate or Compensate Comp Time?
Private-sector employers who don't want to calculate or pay comp time have other options when they are trying to reward employees for going above and beyond the call of duty.
When an employee's workload is extraordinary on a regular basis, private sector employers solve the problem of no comp time by:
- streamlining and continuously improving the job,
- assigning work goals to another employee,
- adopting a flexible work schedule, or
- hiring an additional employee.
Informally, many organizations leave time off decisions in the hand of managers who supervise staff. If an employee has an unusually active travel schedule, is devoting many weekend hours to work or work travel, or is temporarily working large numbers of hours for a new product release, a needed sales goal, or the integration of a new company or department, to name a few examples, a manager may provide to the employee time off from work.
The manager might say, "Hey, John, you've really been putting in the midnight hours. Why don't you take Friday and Monday off to spend some time on your own or with your family." Or, trying not to increase the employee's stress, "Mary, pick a good day to take off work after the product launches. Your extra effort deserves an extra day off."
This time allotment rewards, provides recognition and says thank you to the employee for their superior effort and accomplishment. (Additional forms of recognition can include gift cards. See forty more ways to recognize employees.)
One factor that managers need to understand is that they should never allow the time off according to the number of extra or unexpected hours worked. The key is that the time is not laid out on a scorecard and permitted according to the extra hours worked. This is what differentiates the time off from comp time. This is an important differentiation.
The additional time worked comes with the nature of the job and exempt employees know the expectations when they accept the position. The time commitment necessary to accomplish the whole job is required. Extra hours worked above forty are not compensated.
Adjusting Comp Time Expectations for Employees Moving From Public Sector to Private Sector Jobs
Employees who join companies from public sector employment have a difficult time making the adjustment to the concept of a whole salaried job. They are used to recording their extra hours over 40 and they expect comp time accordingly.
When informed that comp time is not recorded or compensated in the private sector, their first reaction is usually to make a quick trip to HR. Once there, they make the suggestion that their employer starts to provide compensatory time. Almost always disappointed when turned away and informed that comp time is almost never available in the private sector, the employee learns the new lay of the land.
Examples of Comp Time in Action
For example, in a public sector university, during the office move to larger quarters, Mary, a salaried employee, worked 60 hours one week to make the move go smoothly. In return, the university gave her comp time in lieu of payment for the 20 extra hours she worked. Mary used the comp time to take several days off from work.
In a second example, during the last few weeks before the launch of a new private-sector product, the entire development team worked long hours staying into the evening. As a result, their manager scheduled a celebratory lunch which was catered in to thank the employees. He also told the team members to take a day off some time in the next couple of weeks with advance notice given to the manager.
The Bottom Line
Comp time is an expected benefit for many public sector employees and employees in a unionized workplace. Comp time must be avoided when you consider hourly employees who must be paid for every hour worked. Comp time is usually not provided to exempt employees who are expected to contribute a whole job worked no matter the number of hours the employee works in this pursuit.
Please note that the information provided, while authoritative, is not guaranteed for accuracy and legality. The site is read by a world-wide audience and employment laws and regulations vary from state to state and country to country. Please seek legal assistance, or assistance from State, Federal, or International governmental resources, to make certain your legal interpretation and decisions are correct for your location. This information is for guidance, ideas, and assistance.