Comp Time: How Compensatory Time Off Works Under the FLSA

Comp time (compensatory time off) is paid time off given instead of overtime pay. Under federal law it is allowed only for employees of state and local government agencies, and it must be earned at 1.5 hours of time off for every overtime hour worked: 10 overtime hours = 15 hours of comp time. Most employees can bank up to 240 hours, and up to 480 hours for public safety, emergency response and seasonal work (29 U.S.C. § 207(o)). A private employer cannot replace overtime pay with comp time.

Below: who can get comp time, how to calculate it, the caps, when it has to be paid out in cash, and what a private employer can do instead.

Who can get comp time

The U.S. Department of Labor puts it in one sentence: the overtime pay requirement "cannot be met through the use of compensatory time off (comp time) except under special circumstances applicable only to state and local government employees" (DOL Overtime Calculator Advisor).

The statute names the employers: a public agency that is a State, a political subdivision of a State (a county, city, school district and so on), or an interstate governmental agency. For their employees, comp time is allowed only when one of these exists before the work is done (29 CFR 553.23):

• a collective bargaining agreement, memorandum of understanding or other agreement with the employees' representatives, or
• for employees without a representative, an agreement or understanding between the agency and the employee.

The individual agreement does not have to be written, but the agency must keep a record that it exists. It can be a condition of employment if the employee agrees knowingly and voluntarily and is told that comp time can be kept, used or cashed out under the rules. The agreement can limit comp time to certain hours, and the employer may always pay cash instead in any week (29 CFR 553.26).

Salaried exempt employees are not covered by the FLSA overtime rules, so check how your job is classified.

How to calculate comp time

The rate is set in the statute and repeated in 29 CFR 553.20: not less than one and one-half hours of comp time for each hour of overtime, just as cash overtime is at least 1.5 times the regular rate.

Comp time hours = overtime hours x 1.5

First find the overtime hours. Under the general FLSA rule, overtime is every hour over 40 in a workweek, and each workweek stands on its own (29 CFR 778.104). Some fire protection and law enforcement employees can have longer work periods under section 7(k); this guide uses the 40 hour week.

The same check in Python:

def comp_time(hours_worked, threshold=40, rate=1.5):
    overtime = max(0, hours_worked - threshold)
    return overtime * rate

print(comp_time(50))    # 15.0
print(comp_time(46))    # 9.0
print(comp_time(52.5))  # 18.75

Comp time is worth the same as cash overtime. At $22 an hour, 10 overtime hours paid in cash are 10 x $33 = $330. Taken as comp time, they are 15 hours off at $22 = $330.

Mixing comp time and cash

An agreement can combine the two, as long as the total is still worth time and one half. The regulation's own example (29 CFR 553.23(a)(2)): for each overtime hour, 1 hour of comp time plus half the regular rate in cash. With 10 overtime hours at $20 an hour, that is 10 hours of comp time plus 10 x $10 = $100 in cash.

Using comp time does not count as hours worked

Under § 207(o)(7)(B), hours of comp time taken off are paid at the regular rate but are not counted as hours worked for overtime. A week with 8 hours of comp time used and 36 hours worked has 36 hours worked, so no overtime, even though 44 hours are paid.

The 240 and 480 hour caps

The second column is from § 207(o)(3)(A), the third from 29 CFR 553.22(b): 480 / 1.5 = 320 and 240 / 1.5 = 160. Once the cap is reached, further overtime must be paid in cash.

Which cap applies depends on the work actually done, not on a job title. Under 29 CFR 553.24:

• Public safety means law enforcement, fire fighting and related activities, for employees whose work regularly involves them. Office staff who help only in an emergency stay at 240.
• Emergency response includes dispatching emergency vehicles and personnel, rescue work and ambulance services, again only when it is a regular part of the job.
• Seasonal activity means regular, recurring periods of much higher demand that are likely to push comp time over 240 hours, such as processing tax returns or a snow plow season. A few busy weeks on a project do not count.

Someone who moves from a 480 hour job to a 240 hour job keeps the balance. The employer does not have to cash out the hours above 240, but all new overtime is paid in cash until the balance drops below 240.

Example: the cap is reached in the middle of a week

A city clerk on the 240 hour cap has 231 hours of comp time and works 50 hours this week, so 10 overtime hours. The regular rate is $25.

• Room left under the cap: 240 - 231 = 9 hours of comp time.
• Overtime hours that fill it: 9 / 1.5 = 6.
• Overtime hours left: 10 - 6 = 4, paid in cash at 1.5 x $25 = $37.50, so 4 x $37.50 = $150.
• New balance: 231 + 9 = 240 hours.

cap, balance, overtime, rate = 240, 231, 10, 25.00
as_comp = min(overtime, (cap - balance) / 1.5)  # 6.0 overtime hours
cash_hours = overtime - as_comp                 # 4.0
print(balance + as_comp * 1.5)                  # 240.0
print(cash_hours * rate * 1.5)                  # 150.0

This is a calculation, not legal advice. An agreement can set rules for how the cap is handled as long as they meet § 207(o).

Using comp time

An employee who asks to use comp time must be allowed to take it "within a reasonable period after making the request" unless that would "unduly disrupt" the agency's operations (§ 207(o)(5)). 29 CFR 553.25 explains both terms:

• Reasonable period depends on the agency's normal work practices: the usual schedule, expected peak workloads, emergency staffing needs and whether substitutes are available. If an agreement sets the conditions for taking comp time, its terms decide what a reasonable period is.
• Unduly disrupt needs more than inconvenience. The agency must reasonably and in good faith expect that granting the time would put an unreasonable burden on its ability to provide services to the public.

The same regulation says comp time cannot be used to avoid overtime pay, and an employee must not be pushed into accepting more comp time than the employer can realistically grant.

When comp time is paid out in cash

While employed. 40 hours of comp time cashed out when the regular rate is $26 are 40 x $26 = $1,040, even if they were earned when the rate was lower.

At termination. The "last 3 years" means the 3 years right before the job ends; with less than 3 years of service, the average covers the time actually worked.

• 80 unused hours, 3 year average $24.50, final rate $26.00: the higher rate is $26.00, so 80 x $26 = $2,080.
• 80 unused hours, 3 year average $27.00, final rate $25.00 after a move to a lower paid job: 80 x $27 = $2,160.

def termination_payout(hours, avg_3y, final):
    return hours * max(avg_3y, final)

print(termination_payout(80, 24.50, 26.00))  # 2080.0
print(termination_payout(80, 27.00, 25.00))  # 2160.0

"Other" comp time the FLSA does not regulate

Not every bank of comp time falls under § 207(o). 29 CFR 553.28 calls it "other" comp time when it is earned for hours that are not FLSA overtime, for example:

• hours over 8 in a day under a collective bargaining agreement, in a week that stays at 40 or less,
• hours over 35 in a week under a local ordinance (the FLSA only counts hours over 40),
• extra hours under a personnel policy or custom.

The FLSA does not require these, does not set their rate (it can be 1 hour per hour or any other multiple), and the caps and payout rules above do not apply to them.

Private employers: time off in the same workweek

For private sector employees covered by the FLSA, overtime must be paid in cash at 1.5 times the regular rate for hours over 40 in a workweek, and it "may not be waived by agreement" (DOL Fact Sheet #23). Comp time later does not replace it.

What a private employer can do is schedule the hours inside the same workweek so the week never goes over 40. The FLSA works week by week and "averaging of hours over two or more weeks is not permitted" (same fact sheet).

In the second row the 5 hours off in week 2 do not cancel anything: week 1 still has 5 overtime hours, 40 x $20 + 5 x $30 = $950. Week 2 is calculated on its own.

The workweek is the employer's fixed 168 hour period, which can start on any day and hour, so "the same week" means that period, not the calendar week. State law can add rules on top of the federal ones; see overtime laws by state and the California overtime law guide.

Count the overtime hours first

Comp time starts from the overtime hours, so they have to be right.

1. Open the overtime calculator and keep "U.S. federal (FLSA): over 40 hours a week".
2. Set the day your workweek starts so it matches your employer's workweek.
3. Enter start, end and unpaid meal break for each day. Comp time hours you took off are not hours worked, so leave those days empty.
4. Read the overtime total, then multiply by 1.5 for comp time.