What Exactly is Compensatory Time Off Along With Benefits

January 23, 2023
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What Is Compensatory Time Off?

Compensatory time off, also known as comp time, is a type of leave that allows employees to take time off in exchange for working overtime. The idea behind comp time is that instead of paying employees extra money for working overtime, they can receive time off at a later date as a form of compensation.

There are some specific rules and regulations that apply to comp time. For example, in the United States, the Fair Labor Standards Act (FLSA) allows private sector employers to offer comp time to their employees, but only if the employees are classified as non-exempt under the FLSA. Non-exempt employees are generally entitled to overtime pay for working more than 40 hours a week. Exempt employees, on the other hand, are not entitled to overtime pay and therefore cannot receive comp time.

In addition to these rules, there are also limits on the amount of comp time that can be accrued. Under the FLSA, the maximum amount of comp time that can be accrued is 240 hours or approximately six weeks of full-time work. If an employee accrues more than this amount, the employer must pay the employee for the additional overtime hours.

It's important to note that not all employers offer comp time, and it's up to the employer to decide whether or not to offer it to their employees. If you have questions about comp time or your rights as an employee, you should speak with your employer or a human resources representative.

The law allows employers to grant compensatory time off to salaried employees only after they've worked at least 1,000 hours over 12 months.

How Can Compensatory Time Off Be Calculated?

You can calculate the Compensatory time if you know the details of the number of overtime hours by the employee and the pay rate they have been working on regularly. It is the hourly wage of any employee, including the additional compensation they are entitled to. This info is eventually used to calculate the overtime rate.

Compensatory time off can be calculated by determining the number of hours an employee has worked beyond their scheduled hours. For example, if an employee works 10 hours of overtime in a week, they may be eligible for 10 hours of compensatory time off. It is important to note that compensatory time off policies vary by the employer and may also be regulated by state and federal laws.

Once you have this information, you can use the following formula to calculate the amount of compensatory time to be awarded:

Compensatory time = (overtime hours worked x regular rate of pay) / 2

For example, if an employee works 45 hours in a workweek and their regular pay rate is $20 per hour, they would be entitled to 5 hours of compensatory time at their regular pay rate. This would be calculated as follows:

Compensatory time = (5 overtime hours x $20 regular rate of pay) / 2 = $100

You can then use the above method or create an excel sheet with the formula for all the employees to make things easier and smoother.

Can A Salaried Employee Get Compensatory Time Off?

If a salaried employee works more than 40 hours per week, they are entitled to at least 1 hour of compensatory time off per hour worked over 40 hours per week—so if they work 60 hours per week, they should expect at least 2 hours of compensatory time off every week.


Benefits Of Compensatory Time-Off

Compensatory time off can provide a number of benefits for both employees and employers. Some of the benefits include:

  1. Flexibility: Compensatory time off allows employees to take time off when it is convenient for them, rather than being restricted to specific vacation days or holidays.
  2. Cost-effective: Compensatory time off can be a cost-effective alternative to paying overtime wages, as employers may be able to avoid paying time-and-a-half or double-time pay.
  3. Employee morale: Compensatory time off can help increase employee morale and job satisfaction by allowing them to take time off when they need it.
  4. Productivity: Allowing employees to take time off when they need it can help improve their productivity when they return to work.
  5. Employer's benefit: Employers benefit by having the ability to schedule their employees' time off in a way that best meets the needs of the company.

It's important to note that compensatory time off policies vary by employer, and some employers may not offer this benefit. Additionally, compensatory time off may be regulated by state and federal laws. 

Employees can use compensatory time off as a reward or incentive to do their best work. If you're an employer, this could be especially useful if you have a high-performing team that needs special recognition.

For example, if one of your employees has been working hard lately and wants them to know how much you appreciate their efforts, compensatory time off might be the perfect way to show them how much they mean to you.


Compensatory time off can add stability and security to your employees' lives which can help you retain talent. It can also free up your team's hours to complete projects or do additional work for clients when you have a tight deadline or crunch.

Defining the policies and procedures for compensatory time off takes time, but it's well worth setting it upright and letting it run smoothly in your company.

Find out how Compport can help you manage all your Employee Benefits process, book a demo today!

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