The Fair Labor Standards Act (FLSA) is a federal legislation that sets out standards for minimum wage, overtime pay, recordkeeping, and child labour for employees in both the public and private sectors in the United States.
The primary objective of FLSA is to safeguard employees against unjust treatment and ensure they receive appropriate remuneration for their work. In this blog, we will explore the differences between comp time and overtime under the FLSA.
What is Comp Time?
Some employers offer compensatory time as an alternative to overtime pay to their non-exempt employees. The arrangement allows employees to earn overtime compensation that can be used later as paid time off.
However, it’s essential to remember that comp time is subject to stringent guidelines under the Fair Labor Standards Act (FLSA).
According to FLSA regulations, employers are required to provide comp time to non-exempt employees at a rate of 1.5 hours for every hour worked over 40 hours in a workweek. For example, if an employee works 60 hours in a workweek, they are eligible for (20 extra work hours X 1.5 rate) 30 hours of comp time.
What is Overtime?
The Fair Labor Standards Act (FLSA) requires employers to compensate non-exempt employees for any hours worked over 40 hours in a workweek with additional pay known as overtime. The FLSA sets a minimum overtime pay rate of 1.5 times the employee’s regular rate of pay. So, if an employee earns $40 per hour, their overtime pay would be $60 per hour.
Differences between Comp Time and Overtime under the FLSA
Here is a comparison table of the differences between comp time and overtime under the FLSA:
| Differences | Comp Time | Overtime |
|---|---|---|
| Type of payment | Time off from work | Additional pay for hours worked over 40 hours |
| Rate of payment | 1.5 hours off for each hour worked | 1.5 times the employee’s regular rate of pay |
| Eligibility | Available to non-exempt employees | Available to non-exempt employees |
| Maximum accrual limit | 240 hours | No limit |
| Cash-out option | Allowed in certain circumstances | Not allowed |
Conclusion
Understanding the differences between comp time and overtime is crucial for both employers and employees. While comp time provides time off from work in lieu of overtime pay, it is subject to strict guidelines under the FLSA, including a maximum accrual limit of 240 hours. On the other hand, overtime pay is a mandatory additional pay of at least 1.5 times the employee’s regular rate of pay for hours worked over 40 hours in a workweek, with no maximum accrual limit. For more information on Comp Time and Overtime, visit the Compliance Prime website.
