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Aug10

Comp time upon resignation

I have a salaried employee that has resigned and is asking us to pay her for unused comp time. Are we obligated to do so as we have no way to know if the amount of comp time claimed is legit?

It’s important to remember the difference between classification under the Fair Labor Standards Act (FLSA) and payment method. Exempt and non-exempt are FLSA classifications. Salaried and hourly refer to payment methods.

Non-exempt employees must receive at least minimum wage for each hour worked and overtime wages of one and one-half times their normal wage for each hour worked over 40 in a workweek. Non-exempt employees cannot receive compensatory time in lieu of overtime wages in private sector employment.

To qualify for exempt status under the FLSA, employees generally must meet certain tests regarding their job duties and certain compensation requirements. Exempt employees receive a fixed, pre-determined salary for a workweek. Exempt employees can work any amount of hours in a workweek and not receive overtime pay. Thus, many employers choose to offer compensatory or comp time to exempt employees when they work unusual or long hours.

The FLSA doesn’t provide clear guidelines on granting comp time to exempt employees and there is no legal requirement or obligation to offer exempt employees comp time. Thus, employers are free to establish a practice or policy regarding the administration of comp time. Such a policy should include which employees are eligible for comp time, how it’s accrued, approval procedures, time frames for usage, and eligibility for payment, if any, at separation. Keep in mind that some employers may prefer to not implement a formal policy on comp time since doing so may create the expectation that exempt employees only work a set number of hours. Regardless, if comp time is offered employers should inform employees of its parameters.

Generally, an employer is within its rights to deny the payment of accrued comp time when an employee separates from employment. However, if the employer has a past practice or policy of compensating exempt employees for accrued comp time at separation then it’s best practice to do so in this situation as well.

This entry was posted on Sunday, August 10th, 2014 at 10:45 am and is filed under
Compensation.
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