What is Compensatory Time

Comp time is usually allowing exempt employees additional time off in the future for working additional days or hours now. In the private sector, it is most often used for exempt employees.

In the private sector, it can be used for non-exempt but it is much trickier. Since non-exempt employees have to be paid for all hours worked in a work week, the only comp time you can offer them is in time off on the last day of the work week to make up for extra hours worked in the beginning of the week. My recommendation is to not consider comp time for non-exempt - just pay them for all hours worked.

In the public sector, there is an option to utilize comp time for overtime hours worked for non-exempt employees. There are specific rules that have to be followed. The employee has up to six months to take the time off and the time off granted must be one and a half hours for each hour of overtime worked. If the employee does not take the time off within the six month limit, the employee must be paid time and a half for the hours worked.

Because this can create an administrative nightmare, the cost of offering this to employees may be more than paying the overtime when it is earned. Therefore, it is recommended great care be taken before implementing such a practice in the public sector.