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Salaried Exempt Employee and Comp Time

Our owner says comp time is illegal. He says employees are paid for extra hours worked during the year with a yearly bonus. The bonus is only paid if the facility “makes” budget and the employees personal goals are met at an acceptable percentage.
I am new to HR, so I am confused. Are exempt salaried employees in Colorado entitled to comp time?

No, exempt salaried employees in Colorado (or any other state) are not entitled to comp time.

Comp time is compensatory time off given instead of overtime payments. Under the FLSA, the federal Fair Labor Standards Act, only public agencies (like state and local governments) can give comp time to non-exempt or hourly employees, instead of paying overtime. If the employee works 1 hour of overtime this week, he or she is given 1.5 hours of extra time off, paid, to use at some point in the future. Private employers (meaning companies) must pay overtime to hourly or non-exempt employees who work more than 40 hours in the payroll week. They cannot legally give comp time instead of paying overtime, even if the employee wants them to.

Exempt employees are not entitled to overtime. Under the FLSA, an exempt employee receives his or her usual weekly salary, regardless of whether they work 20 hours in the payroll week or 100 hours in the payroll week. (Your boss is wrong about one thing. If he wanted to grant comp time to exempt workers, it would be lawful. But 90% of employers do not grant comp time to exempt employees, regardless of how mane hours they work in the week.

So actually, the exempt employees are being paid for the extra hours. It is called thier salary. The employer could actually require that exempt employees work the extra hours even if he offered no bonus.

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26 Responses to “Salaried Exempt Employee and Comp Time”

  1. Debra Hurston Says:

    If comp time has been written into the employee manual and I would like to remove it because it is being used as an “entitlement”, is there anything I need to consider before removing it and having the changed approved by the board? We are a nonprofit organization with only 3 employees.

  2. Caitlin Says:

    Hi Debra! Yes, there is a very, very important consideration before you remove comp time: are the salaried employees exempt or non-exempt? There are five classes of exempt employees under the federal FLSA. Many nonprofits avoid paying overtime to non-exempt salaried employees by providing comp time instead. This is legal only as long as the employee voluntarily agrees to it. If the employee is not permitted to take comp time, he or she is entitled to overtime at 1.5 times the average hourly rate for any payroll week in which he or she works more than 40 hours. In that sense, a non-exempt employee is “entitled” to comp time. It would be very, very unusual for all three of your employees to be exempt. HTH, and thanks for reading the blogs!~Caitlin

  3. Dave Kuper Says:

    If a salaried exempt employee has a temporary medical condition during which they cannot work full days, can we move him/her to an hourly employee and only pay them for the number of hours worked?

  4. Caitlin Says:

    Hi Dave! Yes, you can. However, generally the employee would be entitled to unpaid FMLA leave. If the exempt employee uses FMLA, his or her salary is prorated according to the number of hours that the employee works.
    There are only 2 situations under the FLSA when an exempt employees salary can be prorated. The second one is, if the employee has a permanent disability that is covered by ADA, the Americans with Disabilities Act. Again, the employer can put the exempt employee on a reduced schedule, and prorate the employees salary according to the number of hours the employee works.
    Another option is to simply switch the employee to hourly status, and pay them for the number of hours that the employee works. When the employee is fully recovered, he or she is switched back to exempt status. This is entirely legal, because it is an accommodation for the employee. HTH, and thanks for reading the blogs!~ Caitlin

  5. Lee Says:

    There seems to be some confusion in our office regarding exempt and non-exempt status. We are a non-profit in Oklahoma whose obligations require the Case Manager or Volunteer Supervisor positions to oversee multiple volunteers appointed to deprived cases. These paid positions all require sound judgement, decision making, supervision of others (albeit volunteers) and exceed the minimum weekly pay set forth under FLSA. We have these positions classified as exempt. A comment was recently made that a prior payroll/HR company classified these positions as non-exempt? Am I missing something?

  6. Caitlin Says:

    Hi Lee! Many non-profits mistakenly classify workers as exempt when they should be salaried non-exempt. Not everyone who uses sound judgment in their daily work is genuinely an exempt employee. And, the U.S. Department of Labor has become much more strict in enforcing these regulations.

    It is impossible for us to determine whether these employees are exempt or non-exempt without knowing a lot more about their jobs. See the fact sheets below.

    This is a gray area, but it appears that supervising volunteers does not meet the FLSA test for supervising two full-time *employees.* Be very careful about the exempt Administrator category. The courts are increasingly overturning this exemption status, unless the employee spends almost all of his or her time making business decisions. An accountant for a non-profit might very well be exempt. A secretary is not. HTH, and thanks for reading the blogs!~ Amelia

    Read more about this at: and and

  7. Steve Justice Says:

    We have techs in the field out of state for 16-17 days at a time, they are salaried exempt. When in the field they will mostly always work everyday sometimes 10-12 hrs a day. The company pays the employee an undertime pay for hours over 40 in the field and gives them comp time when returning home, what are the rules for this? I am not sure if anything is required to give them for hours over 40 including comp time as an exempt salaried employee.

  8. Caitlin Says:

    Hi Steve! We have doubts that these employees actually meet the federal guidelines for salaried exempt employees under the FLSA. Usually techs do not meet those requirements. We think it is more likely that these employees are salaried non-exempt, and are entitled to overtime when they work more than 40 hours per week. Businesses are not allowed to provide comp time in lieu of paying overtime under the federal FLSA.
    If the employees were genuinely exempt, they would not be entitled to overtime or comp time when working more than 40 hours per week. However, it might be more difficult to attract highly qualified candidates if they were not given comp time when returning home.
    Undertime does not seem to apply in this case since it appears the employees are working at least 40 hours per week. This is a complex issue, so feel free to post additional questions. HTH, and thanks for reading the blogs!~ Caitlin

  9. Steve Justice Says:

    Hi Caitlin,
    Should these employees be on an hourly non exempt status? What are your feelings on what staus they should occupy?

  10. Caitlin Says:

    Hi Steve! Yes, we suspect that these techs should be paid on an hourly basis. Since the employees travel out of state, they are covered by federal law. The federal FLSA recognizes only 5 categories of salaried exempt employees based on primary duties: Executives, Outside Sales, Professionals (like doctors and lawyers), certain Computer Pros (such as highly paid programmers and software designers) and Administrators. Generally techs do not fall into any of those categories. Anyone who primarily works with his or her hands is not an exempt employee.
    These employees may be salaried non-exempt. If so, they are entitled to overtime when they work more than 40 hours per week and can be paid less when they work fewer than 40 hours per week. Salaried non-exempt status is a legal minefield, and it often makes more sense to simply make the workers hourly employees. HTH, and thanks for reading the blogs!~ Caitlin

  11. Edna Mae Harris Says:

    Hi, We are a not-for-profit organization, our salaried exempt employees, work 40hrs week. However there are times we work 48 to 56hr a week, can comp-time be denied?

  12. Caitlin Says:

    Hi Edna! Yes, if these employees are genuinely exempt, there is no requirement to grant them comp time, regardless of how many hours they work. Usually, non-profits grant comp time to non-exempt employees. HTH, and thanks for reading the blogs!~Caitlin

  13. Jeremy Says:

    Our organization has professional exempt employees who are credited comp time for any hours worked over 40 per week. In weeks where an exempt employee works less than 40 hours the comp time balance is reduced. If an exempt employee takes more time off than they have vacation or comp, the company proceeds to maintain a negative comp time balance. At the end of the fiscal year, comp time can either be paid out at a rate of the employees annual salary divided by 2,080 (hourly rate), or it can be converted into vacation time, which a maximum of 160 hours can be carried over to the next fiscal year. Is this system legal? Should the employer be paying overtime for the hours worked? Does the employee lose its expempt status when he/she is measured my hours worked rather than quality of work performed? In my personal opinion, the employer is benefiting from only having to pay employees for actual hours worked (hourly employee) as well as not having to pay time and a half for hours worked over 40 per week (exempt employee).

  14. Caitlin Says:

    Hi Jeremy!

    An exempt employee is never entitled to overtime, regardless of how many hours he or she works in the payroll week.

    The employer can establish the expected work week and discipline or terminate any employee who works less. The expected work week can be 50, 60, 80 or more hours per week.

    There is not any state or federal law that requires the employer to grant comp time to exempt employees when the employee works more than 40 hours. The employer could require that an employee work 80 hours some weeks (or every week) without offering any comp time.

    When you view it through that lens, this employer is actually being generous by permitting employees to take comp time, and by converting comp time to vacation time at the end of the year. At least 90% of companies with exempt employees are not so generous. They simply require exempt employees to work additional hours with no additional time off. HTH, and thanks for reading the blogs!~ Caitlin

  15. Jodi Geiger Says:

    New to HR and tell me the difference of non-exempt and exempt employees. Then salary non-exempt.

    We have salaried employees that are based on 50 hours for the work week. Are those employees entitled to comp time for anything over 50? Some of that time is in the office and some of the time is outside of the office. I understand for hourly people they get overtime pay for over 40 hours a week. But the salary people are the ones that I am not sure about. We have Paid time off as well for vacations, sick leave anything they take time off.

    Thank you.

  16. Caitlin Says:

    Hi Jodi!

    An employer can put any worker on salary simply to make processing payroll easier. However, under federal law, only certain salaried employees can be exempt.

    The federal FLSA, the Fair Labor Standards Act, is the federal minimum wage and overtime law. Under that act, only 5 types of salaried employees can be exempt: Outside sales, (some) Computer Pros, Executives, Administrators and Professionals (like doctors and lawyers.) Exempt status depends upon the employees primary duties, not his title or job description.

    Any employee who is on a salary, but does not fall into one of those five categories is a non-exempt salaried employee. Non-exempt salaried employees are entitled to overtime when they work more than 40 hours per week.

    It sounds like your salaried employees are exempt (or at least, being treated as exempt.) An exempt employee can be required to work any number of hours per week without overtime payment. The exempt employee is also not legally entitled to comp time, or time off, when he or she works more than the minimum number of hours.

    There is no law that any employer has to grant comp time to exempt employees. This is a matter of company policy, rather than employment law. Some companies do grant comp time, but more do not.

    If you flip through the posts to about March 17, 2011, there is a post with links to all the federal information on exempt employees.

    This is a complex issue, so feel free to post additional questions or comments. HTH, and thanks for reading the blogs!~ Caitlin

  17. BJ Says:

    I am an exempt employee that often works 20% more hrs in a pay period than the nominal 8hrs per day. The issue becomes when I may take a day off and whether I am required to charge leave. The corporate expectation is at least 8 hrs per day for the pay period. So in a 96 hr pay period, even with a day off, I may still have 110 hrs logged. Am I required to take leave to cover hours missed even though I am well over the minimum expected? The company policy is silent on this aspect.

  18. Caitlin Says:

    Hi BJ! Yes, the company can require that you use a day of paid leave whenever you are absent, even though you have worked the minimum number of hours in the payroll period.

    The employer can set an expectation for the number of days worked per payroll period, not just the number of hours. Any employee who does not meet this expectation (and does not use paid leave) can be disciplined or terminated.

    The company has to pay you, therefore most companies are going to charge you leave when you are absent.

    The overwhelming majority of employers require this. If they did not, an employee could work 48 hours in two days and take the rest of the week off, every week. HTH, and thanks for reading the blogs!~ Caitlin

  19. Ms. Ross Says:

    A previous supervisor for a non-profit organization granted an exempt employee the approval to obtain comp time for working on the weekends. According to the employee, there is a current comp time balance of 100+ hours. Now there is a new supervisor and the supervisor realizes that the employee should have not received the comp time in the first place. Can you tell the employee that comp time is not valid and no comp time should have been granted in the beginning? Is the company under any obligation to honor the comp time balance?

  20. Caitlin Says:

    Hi Ms.Ross! In the overwhelming majority of states, comp time for exempt employees is a matter of company policy rather than employment law. An employer can decide to grant comp time to an exempt employee who works on the weekends, or more than 40 hours per week. By the same token, the employer can decide to no longer honor comp time.
    If there is a written agreement in place regarding comp time, a few states such as New York and California would require the employer to honor comp time that has already been granted. However, those states are in the minority.
    However, many times a non-profit will grant comp time to a NON-EXEMPT salaried employee, rather than pay overtime. That is a very different situation. In that case, the comp time can be eliminated, but the employee must be paid for it, as wages due. HTH, and thanks for reading the blogs!~ Caitlin

  21. Paul LaHaye Says:

    I am a salaried employee working for a non-profit, tax funded, governmental environmental/construction type organization. I an an “Exempt” employee and am not paid overtime, rather I earn comp. time at a rate of 1 hr. for 1 hr. (even) over 40 hrs. per week. I average 15 to 18 hrs. per week over 40 hrs. However, I am not allowed to accrue more than 30 hrs. comp. time. All comp. time is rolled back to 30 hrs. every time it exceeds 30 hrs. In a year I may work 400 to 500 hrs. comp. time that I never am compensated for. Is this legal?

  22. Starr Wilson Says:

    Is it ok for the State of Maryland to pay comp time to contractual employees that work over 40 hours a week? What happens to that comp time if the contract ends prior to it being used?

  23. Paulo Green Says:

    Can an employee then make you stay on longer regardless of your shift and random times with out any notice consistently?

  24. hrlady Says:

    Hi Paulo,

    Yes, an employer can require you to work additional time, with little or no notice. If you are exempt, you are not paid overtime. If you are non-exempt or hourly, you are entitled to overtime.

    Thank You for reading the

  25. Kevin Says:

    I’m employed by the government of the State of Nevada. I’ve recently been made aware that our exempt, salaried employees are being given “comp” time under the table for extra hours worked on weekends or evenings. They justify it by calling it “flex” time and it’s only on a 1 for 1 basis. If they work 8 hours extra on a Saturday, they get 8 hours off at some future point. From a risk management point of view, what happens if one of these employees is involved in an accident during their “comp” time? Obviously, since it’s under the table, the books would show them as being at work. What sort of legal issue does this create? I’ve tried to bring this up with our manager, by he insists it’s completely legal since the term they’re using is “flex” time. Am I incorrect in my interpretation of the law?


  26. hrlady Says:

    Hi Kevin,
    Employees exempt from overtime provisions under the FLSA are generally expected to devote the time necessary it takes to complete the job whether it be 40 hours or 60 hours per week. Some employers choose to offer compensatory time to exempt employees for going above and beyond their regular job duties such as working a day that the employee normally has off. The comp time must be clearly documented. Documentation stating that an employee is at work when he is actually not working can cause significant issues in case of a workers’ compensation claim or allegations of employee misconduct. Though recording the specific hours worked by exempt employees is not legally mandated, doing so is often considered best practice for the aforementioned reasons as well as leave entitlement calculations.

    It seems as though the terms “comp time” and “flex time” are being confused. Comp time refers to time off that makes up for additional hours worked. Some employers have written policies on comp time including the max time allowed to be accrued and a specified time frame in which the time must be used. Flex time refers to a flexible schedule. For example, an employee who worked three hours beyond their shift on Monday could be offered flex time of leaving three hours early on Tuesday. Flex time normally occurs within the same workweek or pay period.

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