Are you an employer that uses comp time instead of overtime? In a recent study it was found that 1/3 of 500 private-sector employers were using comp time instead of overtime. That means that one-third of employers are at risk of a lawsuit because this practice is a violation of the FLSA. With that in mind you might have a lot of questions about comp time and when it’s appropriate to utilize it in a manner that will not make you vulnerable to a lawsuit.
What is Comp Time?
Comp time, also known as compensatory time, is a practice in which employers will give their employees time off, instead of overtime pay in order to compensate for any hours worked overtime. It’s usually illegal, according to the Fair Labor Standards Act, for private-sector businesses to provide nonexempt employees with comp time in place of overtime. The reason for this law is to protect employee’s safety in case it’s ever put at risk by their employer or manager.
The purpose of the FLSA is to make sure that employees are being paid for the hours they are working which explains the laws about comp time and overtime. Something important to note is that even if a company restricts overtime they still have to pay an employee if overtime ever occurs. Employees have to be compensated no matter the overtime laws, and according to a study 17 percent of employers do not pay their nonexempt employees overtime or comp time. This is an illegal practice and should not be occurring in any kind of business.
When is Comp Time Legal?
There are circumstances where employers can legally use comp time but they are few and far between. State and government agencies may use comp time but they have to meet certain requirements in order to do so. Some states allow non-governmental jobs to be paid in comp time rather than overtime, but this is a very difficult area to navigate because of the intersection of state and federal labor laws. Private sector employees have the ability to legally offer exempt employees comp time. Exempt employees are not able to receive overtime, so whether they are offered comp time or not is up to the employer.
Penalties for Violating Comp Time Law
The penalties for comp time violations are as follows:
- A fine of $10,000 for knowingly violating the law.
- Back wages and liquidated damages.
- Paying employees legal fees if there’s a successfully prosecuted lawsuit
- Up to $1,000 (per infraction) of civil money penalties and repeating offenders can face jail time.
- There can be additional fines if you discriminate against an employee that has filed a complaint or uncovered your wage and hour violations.
Being familiar with comp time laws is important because it will keep your business from having any legal problems.