Comp Time

Compensatory time off given in place of overtime pay — legal for government employees, but largely prohibited for private-sector non-exempt workers under federal law.

Compensatory time off (comp time) is paid time off granted to employees in lieu of overtime pay for hours worked beyond 40 per week. Under federal law, comp time is legal for state and local government employees: instead of receiving 1.5x overtime pay, they can bank 1.5 hours of paid time off for each overtime hour worked. For private-sector, non-exempt employees, federal law generally prohibits comp time as a substitute for overtime cash pay — employers must pay time-and-a-half in money, not time.

The confusion arises because many private employers informally offer 'comp time' — telling employees to 'take time off next week' after a late-night crunch. For exempt salaried employees, this is legally fine because exempt employees aren't entitled to overtime pay in the first place, and informal flex arrangements are at the employer's discretion. For non-exempt employees (hourly or salaried-non-exempt), offering comp time instead of overtime cash is a wage violation under the FLSA, even if the employee voluntarily agrees to it.

Some states have their own comp time rules that differ from federal law. California, for example, is particularly strict — its labor code limits the conditions under which even public employees can use comp time arrangements. If you're being offered comp time in a private-sector non-exempt role, it's worth knowing your rights: you can file a complaint with the Department of Labor's Wage and Hour Division, and back pay for unpaid overtime can be recovered for up to two years (three for willful violations).