Can our company offer comp time - or paid time off - in lieu of paying overtime wages to hourly employees?
Comp time is defined as giving an employee time off rather than paying overtime for hours worked in excess of forty hours per week. For example, if an hourly employee works 45 hours in one week, the employer would give the employee 5 hours of comp time (time off) to be used in the future, instead of paying for 5 hours of overtime. This practice is prohibited for non-exempt employees, who are typically paid hourly, unless the employer is a Federal, state or local government employer. Accordingly, pay employees overtime and don’t use comp time as a method of compensating for overtime.