When completing an employment law claim, you may need to understand certain nuances regarding your rights (and your employer’s responsibilities). For example, perhaps you’re submitting a claim or complaint due to an overtime or compensatory time dispute.
It’s essential to understand the differences between the two if so. The following overview explains overtime pay, compensatory time, and how they differ.
Overtime Pay
Per the Fair Labor Standards Act (FLSA), employers in the U.S. must offer overtime pay to certain types of workers when they work more than 40 hours in a given work week. Overtime pay must be at least one-and-a-half times an employee’s typical pay.
Not all employees in the U.S. are eligible to receive overtime pay, even if they work more than 40 hours. Some types of employees, often white collar professionals, are exempt from FLSA overtime pay requirements. Employers can check the U.S. Department of Labor (DoL) Fact Sheet #17A to learn more about who is and isn’t exempt.
Some employers attempt to avoid paying overtime by misclassifying employees as exempt when they actually aren’t. You may take legal action if your employer has misclassified you.
Compensatory Time (Comp Time)
Employers don’t always have to pay employees in cash when they work overtime. In some instances, employers can offer employees compensatory (comp) time instead.
Comp time is extra paid time off. An employee may accrue comp time in lieu of overtime pay. Typically, there are limits on comp time.
For example, when an employee receives comp time, they must use the comp time they’ve accrued within a given pay period by the end of 26th pay period after the period in which they accrued such time. Similar to overtime pay, only non-exempt employees are entitled to receive comp time.
Such complexities can sometimes make it difficult for employees to understand their rights. Consider speaking with an employment lawyer if you have questions about whether you’ve properly received comp time you’re owed.
Key Differences Between Overtime Pay and Compensatory Time
Differences between overtime pay and compensatory time include the following:
- Form of payment: Overtime pay is money, whereas compensatory time is paid time off as a substitution for money.
- Regulations and requirements: As with overtime pay, some employees are exempt from receiving compensatory time. Usually, only government agencies can offer compensatory time.
- Flexibility and usage restrictions: Various restrictions can apply depending on whether you receive overtime pay or compensatory time. As previously mentioned, an employee may need to use accrued compensatory time within a certain timeframe. With overtime pay, on the other hand, there is no limit on when and how an employee can use the pay they receive. Additionally, you may only receive comp pay for occasional or irregular overtime.
- Impact on employee benefits and taxes: Employees may have to pay taxes on overtime pay. They should consider this if they have the option to choose between overtime pay or comp time. Those who receive comp time should ensure their employers aren’t using it to deny them other paid time off they would normally have.
These are merely general differences. Because individual employers can set their own comp pay policies to an extent, differences may vary from one employer to another.
Employer Obligations and Employee Rights
Employers have certain responsibilities when offering employees both overtime pay and compensatory time. Examples include:
- Thoroughly informing employees of their rights
- Offering both options when the law requires an employer to do so
- Properly classifying employees
- Honoring employee rights to request or refuse comp time when applicable
Be aware that employee rights can also depend on state laws.
Common Misconceptions and Pitfalls
There are various myths surrounding overtime pay, comp time, and similar topics. They include:
- The myth that an employee must be non-exempt if they receive hourly pay and must be exempt if they’re salaried
- The myth that private sector employers can offer comp time in lieu of overtime pay
- The myth that required rest and break times don’t count towards 40 hours of work in a week
Employees need to know their rights to avoid being taken advantage of. Employers need to understand these issues to avoid legal consequences of non-compliance.
Speak With an Employment Law Attorney
Do you believe an employer has violated your rights in regard to overtime pay or comp time? If so, you may have grounds to take legal action. Find out more about your rights by taking the Free Case Evaluation to speak with an independent employment lawyer who may be able to help with your case.
