Posted by Tamara
It is illegal in New Mexico and elsewhere in the U.S. for a business to give an hourly employee “comp time” in lieu of overtime pay.
“Comp” time is paid time off in place of paid overtime. Government agencies and non-profit organizations may grant comp time but private employers may not use the method to avoid paying overtime.
For example, a New Mexico employee wrote “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?”
Meanwhile from another part of the state an employer asked “Can I grant comp time to workers instead of paying overtime?”
In both instances, the answer is “No,” and here is why:
According to the Fair Labor Standards Act (FLSA), hourly employees must receive overtime rates when working more than 40 hours in a payroll week. The worker may not receive time off in a different payroll week in lieu of the overtime. The employer cannot average the worker’s hours over two payroll weeks either.
When an employee works, for example, 60 hours in a given payroll week, he or she must receive 40 hours at the regular pay rate and another 20 hours at the overtime rate, which is 1.5 times the worker’s average pay rate for that payroll week.
Maria’s employer pays her every two weeks. Maria worked 45 hours in the first week of the payroll period. Her employer wanted her to work just 32.5 hours and take 7.5 hours of “comp time” in the following week, while paying Maria for 40 hours for each week. That would be an illegal attempt to circumvent the federal overtime law. Maria must be paid 40 hours of straight time and 5 hours of overtime for the first payroll week. She must be paid for the hours actually worked in the second payroll week.
An employer can require that a worker go home early or take time off during the same payroll week, to minimize overtime. This is not considered “comp time” because it is in the same payroll week.
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