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What is comp time and why is it used instead of overtime?

On Behalf of | Jan 19, 2024 | EMPLOYMENT LAW (EMPLOYEE) - Wage & Hour Laws

Comp time is a type of compensation that employers can provide in lieu of overtime payments. It is essentially just paid time off that makes up for the extra hours that were worked.

For example, an employee may put in four extra hours during a work week. They should be paid overtime wages at time and a half for these extra hours, but their boss may just tell them that they can take time off the following week. This time off is paid, so the person is essentially just using their flexible schedule to move around the times when they have to work. They’re still being paid either way.

The same rates still apply

One thing to remember is that employers may want to use comp time so that they don’t have to pay higher overtime wages. If an employee typically earns $20 an hour, after all, their overtime rate would be $30 an hour. Some business owners want to keep costs down, so they may offer comp time the next week to make up for it, avoiding these higher wages.

But if they do this, employers still have to provide the right amount of comp time, which should be 1.5 times the overtime hours worked. In the example above, the employee put in an extra four hours. Merely giving them four hours of time off would not be enough, as they would deserve six hours off the following week.

Comp time and overtime payments can get complicated, and some employees may feel that their rights have been violated or that they are not being paid the proper amount of wages. Those who are in this position need to be aware of their legal options.