Time limits for exempt and non-exempt employees You take your compensatory time in the same pay period as the overtime hours. Your employer pays your hourly rate for one and a half hours for every hour of overtime you work past 40 hours. You and your employer agree upon the terms of your compensatory time before they credit it to your payroll. If you belong to a union, union representatives form agreements about compensatory time policies. Here are the main guidelines to which you and your employer are subject: When employers use compensatory time in place of overtime pay, it's essential that it meets certain standards and limitations. Related: How To Calculate Overtime Pay (With Definition and Examples) Limitations to compensatory time Employers calculate the appropriate amount of comp time by subtracting 40 from the total number of hours worked and multiplying the difference by 1.5. If an employee works 45 hours instead of 40, they either earn time-and-a-half pay for those five extra hours or 7.5 hours of compensatory time. In the example above, the employee fell under the legal limit of 40 hours that would entitle them to overtime pay, so it's legal for the employer to only offer one hour of compensatory time for every hour of overtime. This is to ensure they get the same value for their labor as they may earn from time-and-a-half overtime pay. Employees earn an hour and a half of compensatory time off for every extra hour they worked over 40 hours. overtimeĬompensatory time and overtime pay are both methods of compensating employees for the extra time they put in at work. Related: Guide to Overtime Pay Compensatory time vs. When implemented correctly and according to the rules laid out in the Fair Labor Standards Act, compensatory time can be mutually beneficial for both employers, who use it to keep their labor budget consistent, and employees who want to maintain a work-life balance in their schedule. It may violate FLSA regulations for a company to use compensatory time as a way to avoid paying their employees time-and-a-half overtime pay. The next week, the employee receives eight hours of paid time off to make up for it.įor non-exempt employees who have a legal entitlement to overtime pay, employers are subject to strict rules in order for compensatory time to be a legal alternative. One week, their manager asks them to stay late each day to finish a project, and they work a total of 40 hours. For example, an employee may usually work 32 hours per week. Some companies have regulated compensatory time policies to accommodate flexible work scheduling, while others use it as a case-by-case solution to unexpected schedule changes. Thus strong supervision is necessary from management to make the effort successful.View more jobs on Indeed View More What is compensatory time?Ĭompensatory time or comp time is the practice of employers giving employees paid time off to balance out hours worked beyond their regular schedule.
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