Indiana Comp Time
Posted by Tamara
An Indiana business owner wants to know, “Can I grant comp time to workers instead of paying overtime?”
Across the state, an employee writes, “I was just recently hired in an hourly job. My new employer very graciously agreed to give me two weeks of unpaid vacation, to take a long-planned trip. I’d like to work extra hours the week before and after, to make up the lost wages. Can I do this without being paid overtime?”
The answer in both cases is “No!”
“Comp time” is paid time off in lieu of paid overtime. It is very common for government agencies and some non-profits to grant “comp time” – but it is completely unlawful for private employers to use this tactic to avoid overtime payments to workers.
Under federal law, hourly employees must be paid overtime when they work more than 40 hours in the payroll week. The employer cannot grant an employee time off in a different payroll week, instead of paying overtime. Nor can the employer average the worker’s hours over two payroll weeks – even if they are in the same payroll period.
Example: Ted works in a commercial bakery. His employer pays every two weeks. The first week of the payroll period, Ted works 50 hours. The next week, Ted works just 25 hours and takes 15 hours of “comp time.” The employer wants to pay Ted for 40 hours each week. This is illegal.
Under the federal FLSA or Fair Labor Standards Act, when an employee works 50 hours in a payroll week, she must be paid for 40 hours of straight time and 10 hours of overtime. Overtime is always figured at 1.5 times the employee’s average rate of pay for that payroll week.
Because overtime hours are calculated by the payroll week, if an employee takes time off during the same payroll week, that reduces overtime. This is a very common way to control overtime and payroll expenses. An employee who works 5 extra hours on Monday may be asked to go home 5 hours early on Tuesday. As long as Monday and Tuesday are in the same payroll week, this is a lawful way to reduce or eliminate overtime.
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