Can Employers Provide Compensatory Time-Off Instead of Overtime?

Only public employers can provide compensatory time-off instead of overtime pay to employees – private employers may not.

The Fair Labor Standards Act (FLSA) requires that employers must pay overtime to non-exempt employees who work more than 40 hours in a workweek at a rate not less than one and one-half times their regular rate of pay.  29 U.S.C. § 207(a)(1).  The FLSA only authorizes “a public agency which is a State, a political subdivision of a State, or an interstate governmental agency” to provide compensatory time-off to employees at a rate not less than one and one-half hours for each hour of employment for which overtime compensation is required in lieu of paying overtime pay to the employee.  29 U.S.C. § 207(o)(1).

A public agency may provide compensatory time-off instead of paying overtime to employees only pursuant to either: (i) a collective bargaining agreement; or (ii) an agreement or understanding arrived at between the employer and employee before the performance of the work.  Public employees who are engaged in a public safety activity, an emergency response activity, or a seasonal activity, may not accrue more than 480 hours of compensatory time-off.  All other public employees may not accrue more than 240 hours of compensatory time-off.  See 29 U.S.C. § 207(o)(2–3).

Takeaways:  Private employers generally may not provide compensatory time-off to employees instead of paying overtime, but public employers can.  Public employers who wish to provide compensatory time-off to employees should ensure that they have either a collective bargaining agreement or an agreement or understanding with the employee before performance of the work regarding the use of compensatory time-off.

About Michael Miller

Michael is a Chambers-rated attorney in Briggs and Morgan's Employment, Benefits, and Labor group and is head of the firm’s Employment Law Counseling and Compliance practice group. He has 25 years experience counseling employers to prevent unwanted litigation and advises companies of ongoing changes in federal, state and local employment law. Michael advises employers in all areas of employment law including discipline and discharge, leaves of absence, wage and hour compliance, non-compete and confidentiality agreements, affirmative action plans, background checking, and drug/alcohol testing. For Michael's full bio, click here.

Posted on June 18, 2012, in Wage and Hour and tagged . Bookmark the permalink. Leave a comment.

Comments are closed.