Skip to main content
Join Now

< Back to All

Heads up: an innocent request for time off can trigger a wage and hour violation

May 29, 2012

By Michael J. Burns

The weather is getting warm and the days longer. Workers are looking for more time off to enjoy the good weather, or take care of personal business they would otherwise take care of on the now-beautiful weekends. So what might they do?

One way of freeing up more time has been to put in some overtime and request to take that time off in the foreseeable future. The supervisor, seeing a way to provide a simple perk to a good employee, says “Sure, when do you want to take the time off?”

To accede to this simple request could result in violation of the Fair Labor Standards Act (FLSA). What the employee is requesting is referred to in the HR world as compensatory time off. If the employee’s position is non-exempt, this can cause a problem. Why?

FLSA’s rule on overtime pay states that non-exempt employees that work over forty hours in a week must be paid at the rate of time and one-half for all hours in excess of the forty-hour limit. The concept of compensatory time that is occasionally—and incorrectly—practiced is to permit non-exempt employees to take that time off at some future time and date. Typically it is the same amount of time off that they put in as overtime.

Allowing an employee to take off, at a later date, the same amount of  time that was worked as overtime, violates the basic rule of overtime in two ways: First, it does not adequately compensate overtime worked in pay; second, the time off is not (typically) provided at a rate of time and one-half.

Keep in mind that we are talking about non-exempt employees. Exempt employees (Executive, Professional, Administrative, Outside Sales and some IT positions) can take time off at their and their employer’s discretion and generally not run afoul of wage and hour law.

The real question is this: Is it ever possible to give time off to a non-exempt employee for overtime worked? The answer is yes, but only under some very specific criteria, and strictly speaking it is not compensatory time off. Here are the requirements:

  • The non-exempt employee must be paid on a salaried basis (and keep in mind another common falsity that paying a salary to a worker does not, per se, make the position exempt).
  • The pay period must be two weeks in length.
  • The overtime worked in one week must occur within the same pay period as the time taken off in the other week.
  • The time taken off in one week (whether the first or second week in the pay period) must be one and one-half times the time worked in overtime the other week.

So the non-exempt employee that works one hour of overtime in week one must take 1.5 hours off the following week (week two of the same pay period) in order to comply with wage and hour regulations. This is why it is not “compensatory” time off. It is re-balancing the employee’s regular paycheck so it equals his or her regular salary with overtime included. The overtime is paid for the one hour of additional work, but the 1.5 hours taken off in the following week reduces the employee pay in that week to a rate equal to his or her normal two week salary.

It is important for employers to review this issue with their supervisors and managers to ensure they following the correct practice in their workplaces.

If your organization is concerned about whether it has properly classified its jobs as exempt or non-exempt, ASE can analyze them for you and advise you as to their proper classifications. If you are concerned in general about your HR compliance practices, ASE can conduct a full audit of your HR function. Click here to learn more about the ASE benefits provided to SBAM members.

Share On: