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Comp time off may run afoul of the law

The practice of employment law can be a thankless pursuit. A couple months ago I cautioned regarding the legal risks of holiday office parties. This article resulted in several e-mails from colleagues accusing me of being a prude, teetotaler and party-pooper.

Last month I cautioned about the illegality of office betting pools. Again, I received several derisive e-mails from colleagues. Most of these e-mails focused on mocking my support of the tragically doomed Duke Blue Devils in the NCAA tournament. But several also called me out for advocating against office betting pools and thereby being, in their words, a spoil-sport.

Spoil-sport? Party-pooper? These are the sort of responses I expect from my kids when I prohibit them from doing things like sledding down the staircase in laundry baskets.

These are not the responses I expect from my legal colleagues.

When we entered this noble profession, did we not all take an oath to be spoil-sports and party-poopers to all those whose actions cause harm to others, or otherwise break the law?

In this spirit, I submit this column and address the practice of awarding employees compensatory time off in lieu of overtime.

Compensatory time off, or “comp time,” is often popular among employers and employees. The basic idea of comp time is to reward non-exempt employees who work more than 40 hours a week by giving them additional time off to use later, rather than paying them time and a half overtime wages. As you can imagine, many Wisconsin employees would gladly work extra hours in cold weather months in exchange for time off during the summer. But, unfortunately, such a comp time scheme would be prohibited by Wisconsin wage and hour law.

Here are three typical problems I see with comp time schemes used by private employers in Wisconsin (public employers are not subject to the same rules regarding comp time):
•Employees are allowed to “bank” comp time for use outside the pay period in which it is earned. This is the most common problem I see in comp time schemes. For private employers, comp time may only be awarded in lieu of overtime if the comp time is used in the same pay period in which it is earned.

For example, an employee who works 44 hours in the first week of a two-week pay period could be awarded comp time in lieu of her four hours of overtime only if the employee uses the comp time in the second week of the pay period. Even if the employee wanted to save the earned time off for later in the year, it would not be allowed by law.

  • Employers award one hour of comp time for one hour of overtime, instead of awarding time and a half. The law requires employers to pay time and one-half the regular rate of pay for all hours worked in excess of 40 hours per week. A comp time scheme that awards one hour of time off for every hour worked does not meet this requirement; employers must award an hour and a half of time off work for every hour of overtime.
  • Employers force employees to accept comp time in lieu of overtime pay. Some employers would prefer to give employees time off rather than pay time and a half in overtime wages. But they cannot force employees to accept comp time in lieu of overtime pay. To be lawful, employees must voluntarily agree to the comp time.

Thus, comp time in lieu of overtime pay is only lawful if the comp time is used in the same period in which it is earned, the comp time is awarded as time and a half of overtime hours worked, and the comp time is accepted voluntarily by the employee. With these restrictions, it is no surprise that most private employers eschew comp time schemes. Some employers reward employees with extra time off as a work incentive or in recognition of work achievement. As long as this time off is given in addition to overtime and regular wages, and not in lieu of earned wages, such a reward will not run afoul of labor standards law.

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