Posted by Tamara
Mark, an hourly employee in Iowa, recently accepted a new job with an employer who allowed him to take unpaid leave for a trip that he had planned many months ago. Mark wonders if he can work extra hours the week before the trip and the week after the trip, and apply those hours toward his vacation time as “comp time” instead of receiving overtime.
An Iowa employer has a question along the same lines. “If an employee puts in 50 hours in one week, can I grant the worker time off the following payroll week (comp time) instead of paying overtime?”
The answer to both situations is a definite “No!”
Here’s the explanation: “Comp time” is paid time off in a future payroll week granted to an employee in the place of paid overtime. Overtime pay and hours are regulated by the Fair Labor Standards Act or FLSA. Under this federal law, employers are required to pay overtime to any employee who works more than 40 hours in one week. Overtime is paid at 1.5 times the worker’s average hourly rate, and is calculated per payroll week.
It is this weekly calculation of overtime that makes the two scenarios illegal. Under FLSA, a private employer cannot legally use future time off as a way to avoid paying overtime.
There are legal ways, however, for private employer to minimize overtime. When used properly a reduction in hours it can be effective at avoiding overtime expenses. The key is to grant the time off in the same payroll week that the extra hours are worked.
For example, Joe works for a small business whose payroll week runs from Monday through Sunday. On Tuesday, Joe works two extra hours. On Friday, his employer sends Joe home two hours early. The employer is perfectly within his legal rights to use time off this way, because Tuesday and Friday are in the same payroll week. Time off in the same payroll week does not meet the legal definition of “comp time”, which is paid time off in a future payroll week.
Last 10 posts by Tamara
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- Florida Overtime Update - April 18th, 2011
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- North Carolina Employee Privacy Act - April 14th, 2011
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