Exempt employees & comp time

2406663 · April 2002

I read the thread of the non-exempt employees and comp time, but what about exempt employees and comp time? Unfortunately, 10 mos ago I stepped into this situation here when I accepted this position. I straightened out the exempt/non-exempt mess that was in place, however comp time hours are accrued hour for hour for any time worked over 40. The problem is when these exempts
accrue so much comp time, that they carry it over (ie. 30 even 100 hours). They claim that it is not reasonable to use it within the period earned, so they carry it over - policy states that they have a year to use it. Does this sound right to all of you seasoned professionals??? And what about paying it out? Are we setting ourselves up if we choose to pay it out to chew down the balances?

dwf · April 2002

I'll take a stab at your question with what I know and hope that some of those more experienced individuals respond too. Exempt ees work until the job is done (their comp is supposed to take this into account) which will likely include hours worked over 40 in any work week. If they have to be gone from the office for short periods of time, they just go without being docked. In the end, the time out and the time worked are supposed to "balance." Why should exempt ees be given this freedom and then on top of that be given comp time (as you describe it) too? However, if your exempt ees are working extremely long hours and you want to recognize that, I'd suggest a more structured program. Ex: A reward system based on a certain number of units produced; the reward could be monetary or time based. Also, I'd look at your exempt work flow or job specifications to determine if you can't reduce some of those extra hours, or maybe your pay structure needs to be overhauled.

Don D · April 2002

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You might be shooting yourself in the foot if on one hand you allow the accumulation of 40-100 hours of comp time and then on the other hand require the employee to take all comp time within, say, the following quarter. If he or she accumulates that much comp time, how would the company do without them for all those hours? In a long prior life I worked for the State and comp time is allowed for such public employees, with several restrictions. Currently my (private sector) employer pays salaried employees every other week and under that pay scheme, a comp time scenario is allowed under the FLSA, for example, by paying the same amount each pay period and offsetting overtime by a time off plan. In the second week of a two-week pay period, the employer may give time off at one-and-one-half times the number of overtime hours worked in the first week. The first week's overtime pay is canceled out by fewer hours in the second week. Since this sounds a bit controversial, let me state my source: He's Jack T. Cavanaugh, Investigator, U.S. Dept of Labor, Wage and Hour Division, Biloxi, Mississippi 228-435-3971 on 5/20/99.

Hatchetman · April 2002

[font size="1" color="#FF0000"]LAST EDITED ON 04-23-02 AT 08:43PM (CST)[/font][p]There is probably disagreement on this point because FLSA regulations do appear to permit "comp time" for overtime for exempt employees while some court cases have at times questioned the practice of allowing straight time, comp time or any other compensation for an exempt working some form of overtime. But there appear to be plenty of court cases that support the practice. It may "hang" on the federal appellate court ruling for the circuit since there appears to be no US Supreme Court ruling on this.

29CFR541.118(b) provides, "It should be noted that the salary may consist of a pre-determined amount constituting all or part of the employee's compensation. In other words, additional compensation besides the salary is NOT inconsistent with the salary basis of payment" [my emphasis]. I understand that DOL advises their auditors that extra compensation can be paid on ANY basis for overtime to an exempt employee.

We allow comp time in full day increments. If the exempt employee works on a regular day off for what would be an the same number of hours on a regular day, he or she accrues the equivalent as comp time. Comp overtime, under our policy, for exempt employees must be earned and accured on full "shift" bases.

Down_the_Middle · April 2002

2406663:
This issue of comp time for exempt employees is one of the most common topics on this board and is grossly misunderstood by most people. Try doing a search on this site and you'll find the necessary info to suggest that comp time for private employers is not legal. Good luck with this.

Rockie · April 2002

Exempt employees are not eligible for comp time under FLSA. If you give them comp time you are treating them as non exempt employees and they are subject to losing their exempt status. If this happens, you can be subject to back overtime compensation for two years or three if the DOL considers your actions a willful violation.

The only exception is in the public sector where certain employees may accrue compensatory time.

santire · May 2002

Comp time is a perennial challenge. It is a challenge in the nonexempt employee area because the law is clear. Absolutely no comp time for nonexempt employees unless they are employed in the public sector. The other challenge is comp time for exempt employee. Here the challenge is created by the courts. They simply have not been very clear in this matter, nor has the DOL. However, the DOL does seem to allow exempt employee to accrue comp time for overtime though it is a complex matter. First of all, agreeing to pay an exempt individual overtime becomes part of the employee’s compensation package which cannot be changed except for future work: i.e.: the employee must be given notice that the package will change in the future before the change goes into effect. Furthermore, the employer must be careful to calculate the comp time for an exempt employee without either tying it to a 40-hour week or without significant reliance on counting hours. The best approach is to base the comp time on a threshold that exceeds the 40-hour week by using, for example, work in excess of 50 hours a week or more than 200 in a month. An even better approach is for a manager to simply monitor an exempt employee and when that employee obviously has been working a significantly excessive number of hours, to grant that employee some paid time off. This would be better for avoiding treating an exempt employee as an nonexempt employee, would clarify the fact that exempt employees are expected to put in the number of hours needed to get the job done, and have a way to reward hard work. Incidentally, concerning the question of whether an employer can force an employee to take comp time before significant amounts are accrued, which is a problem that can impact public sector employers with large numbers of nonexempt employees, the US Supreme court has said that the employer can do so. For example, the employer can tell all employees that they must use comp time within a year of accrual.

Exempt employees & comp time

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