Employers Beware: Comp Time Could Land You in Hot Water

Employees are often more than willing to put in extra hours to help accomplish a specific team or company goal. Participating in special events, trade shows, product launches, and other occasional high-intensity activities can be fun and rewarding for motivated staff members.

In these circumstances, it can be tempting to get creative when compensating helpful employees for this additional time. It can also be a violation of the Fair Labor Standards Act.

What is comp time?

Compensatory (comp) time is sometimes offered to non-exempt employees in lieu of overtime pay. Rather than paying employees time and a half for those extra hours, a company or supervisor might offer additional paid time off to make up for the additional time worked.

Here’s an example: An employee works 48 hours one week as a result of helping out with a company special event. In return, their employer offers to give them an additional paid day off at some other time. Everybody’s happy, right?

Not quite.

While this may sound like a great idea to many employers and employees, it’s usually illegal.

When is comp time legal?

If you’re dealing with public sector employees under a union contract, you may be able to provide comp time in a manner that doesn’t violate the FLSA. Here are a few things to keep in mind:

  • The comp time strategy must be spelled out and agreed to before the extra hours are worked, not after the fact.
  • Employees can’t be required to work mandatory comp time on a regular basis.
  • Comp time must be paid at the same rate as overtime pay, meaning they should receive one and a half hours of comp time for every additional hour worked.

Some states have passed laws that allow private employers to provide comp time instead of overtime. If you’re in one of them, you may be in the clear. Just keep in mind that these laws can be complex and difficult to interpret. Make sure you have a clear understanding of what you can and can’t do. Working with an employment law expert when developing your compensatory time program is always a good idea.

When not to use comp time

If you’re a “better safe than sorry” kind of person, you may want to toss the idea of comp time out the window altogether.

Focusing on a clear compensation system that includes accurate time keeping, fastidious record keeping, and careful attention to hours worked and overtime pay calculations might be the best solution for your business and your employees.

If your employees are putting in extra hours, here are few things to keep in mind:

  • Workers can’t volunteer their time or waive their right to overtime pay. Businesses are required to pay overtime to eligible employees, even if that employee wants to work unpaid.
  • Non-exempt, overtime-eligible employees must be paid overtime for additional hours worked, even if the overtime was unauthorized or prohibited.
  • Simply paying overtime isn’t enough to keep you in compliance. Overtime must be paid at the correct rate. Compensating employees for overtime incorrectly is also a wage and hour violation.
  • Overtime can be mandatory, but comp time cannot.
  • Private sector, non-exempt employees who are covered by the FLSA must be paid at time and a half for all overtime hours worked. Offering them comp time for extra hours worked is a violation of federal law. (Unless your state says differently.)
  • Exempt employees are not entitled to overtime pay. However, exempt employees must be classified correctly according to their job role, duties, and salary. Classifying someone as exempt to avoid overtime pay is a big no-no.

it’s not uncommon for employers to do everything they can to avoid paying overtime, but sometimes it isn’t a matter of ill intent or gaming the system. Sometimes, your employees really do just want to go above and beyond, working extra hours in the process. And you may want to let them.

Unfortunately, those helpful staff members may not realize they are actually putting the company in jeopardy— and you might not realize you’re in danger of non-compliance.

Other overtime hazards

Overtime isn’t just about money or being in compliance. Sometimes, it’s about how much work there is and who may or may not be willing to do it.

Even if you are following all the rules, classifying your employees correctly, and accurately paying people for all of their time, there are a couple of reasons you may want to keep overtime hours in check.

Expecting your exempt employees to work more than their fair share on a regular basis isn’t a good employee retention strategy. Employee burnout is real. And so is math. If your exempt employees get to a point where they’re calculating out their hourly wage, will that salary you’re offering still seem appealing? 

Some employers pay out loads of overtime as if it’s a good thing. But be careful about whether those additional hours are optional or mandatory. Not every hardworking employee thinks being paid time and a half is worth missing every one of their kid’s soccer games.

Finding that sweet spot where work hours, employer compliance, and employee satisfaction all come together won’t just keep you out of trouble. It will make your business healthier and your team happier. 


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Photo by Carolyn Franks

Have You Trained a Manager Today? Here’s Why You Should.

Of course you train your new hires on how to do their jobs. That’s a given. But what about your newly minted supervisors? Are you teaching them how to be good at managing people and processes? If not, you should be.

Being a good manager or supervisor requires a combination of hard skills, soft skills, and most importantly, people skills. If you’re expecting every new manager to come in hardwired with these things, you’ll be in for some serious disappointment. Even when you’re dealing with highly experienced supervisors, they may be bringing management techniques with them that aren’t aligned with your company culture, values, or style. 

Don’t assume your managers know what to do

It’s common to promote your most capable employees and assume they will be capable leaders, but just because someone is good at their work doesn’t mean they will be good at managing people.

Effective supervisors require some very specific skills that they may not have needed or learned in the past. Critical managerial skills include:

  • Leadership
  • Communication
  • Interpersonal skills
  • Performance management
  • Conflict management
  • Process management
  • Time management

It’s likely your supervisors will come into the job strong in a few areas but leaving them to figure out the rest on their own isn’t a good strategy for long term success. The longer you let them flounder, the more likely they are to make mistakes. And when you’re talking about managing people, these kinds of mistakes can have huge consequences.

Finding the balance

Managing people is part art, part science.

The art:

  • There’s the art of developing people in a structured, helpful, and positive way to bring out their best.
  • There’s the art of educating and incentivizing people to both buy into and work to achieve company goals.
  • There’s the art of managing conflict in a healthy and constructive manner.
  • And perhaps most importantly, there’s the art of communicating your various messages in an effective way. This means being responsive and receptive to what employees have to say. When it’s good news, this may seem easy. When it’s a difficult conversation or challenging feedback, not so much. Good managers need to approach tough topics in a way that still feels professional and respectful.

The science:

  • Knowing the ins and outs of your employee handbook so you can enforce rules and reinforce behaviors.
  • Understanding all relevant policies, laws, and regulations to make sure all processes and managers are in compliance.
  • Creating appropriate performance metrics based on individual and company goals, results, and outcomes, and following performance management procedures accurately.

Not training your managers on these kinds of things can lead to some very uncomfortable (and expensive!) situations.

Management training tips

The art:

  • Make sure you have supervisory role models and mentors on your team.
  • Talk about management styles and philosophy.
  • Provide classes on conflict management, dispute resolution, effective communication, and sensitivity.
  • Create a culture that values open communication and collaborative efforts.
  • Support ongoing leadership development.

The science:

  • Train your team on your employee manual and all other corporate policies.
  • Clarify organizational expectations and priorities.
  • Make sure all managerial procedures are well defined.
  • Create a library of tools and resources to help new managers develop their skills and confidence.

At the end of the day, it’s important to hold your managers and supervisors accountable not just for the hard skills they bring, but for their soft skills as well.

Not sure where to start? Consider using a skills assessment for managers and supervisors to help determine key strengths and weaknesses. You may also want to bring in an outside leadership expert and/or training company to help get your team up to speed.

Whether your managers are just starting out or have been doing it for years, chances are all of them have somewhere they can improve.

Bad management can cause good employees to walk out the door— and nobody wants that to happen. Training your managers on how to effectively lead their teams well will help everyone be their best.


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Photo by Lois McCleary


Overwhelmed by Overtime? Here’s What You Need to Know.

Depending on what kind of business you’re running and the kind of work your employees are doing, it can be difficult to manage the various kinds of time your employees are clocking. Or not clocking. Or should be clocking.

The bottom line is this: When employees put in extra hours, employers need to be extra careful when calculating overtime and extra vigilant about paying it out.

Overtime rules

According to the standard Fair Labor Standards Act, overtime refers to time worked over and above 40 hours in any one-week pay period. Sounds simple, right? But there is more to it than that, including some very specific requirements regarding how that work week is defined and which workers are entitled to and exempt from overtime pay.

Here are the basic overtime rules you need to know:

  • FLSA overtime rules apply to all nonexempt employees.
  • The Fair Labor Standards Act applies on a workweek basis.
  • Employee work weeks must be defined as a fixed and recurring time period consisting of 168 hours, or 7 consecutive days.
  • Work weeks can begin on any day and at any hour as long as they meet the above guidelines.
  • Different work weeks may be established for different employees or groups.
  • Averaging hours over multiple work weeks is not allowed.
  • Overtime pay earned in a particular week should be paid on the regular pay day for that specific pay period.
  • The overtime pay rate is equal to 1.5 times the regular rate of pay for all hours worked over 40 in one consecutive time period.
    • The first 40 hours are at the standard rate of pay with anything over occurring at time and a half.
  • Most exempt employees are exempt from overtime pay— if they are classified correctly.
  • Exempt employees who make under a certain salary threshold ARE eligible for overtime pay. Again, it’s important to classify employees correctly.
  • Some states and local jurisdictions have their own overtime requirements, which may provide greater protection for employees than what is provided under the FLSA. It’s important to know your local laws.
  • When federal, state, and local laws conflict, the rule that is most beneficial to the employee should prevail.
  • FLSA requires employers to keep records of payments to employees, including overtime.
    • In the case of an audit, an employer must be able to prove payment of overtime that meets FLSA requirements.

Understanding the definition of overtime and how to properly calculate overtime wages is critical to running your business, staying in compliance, and limiting your exposure to liability and risk.

Staying in compliance

If the fear of wage and hour claims keeps you up at night, you’re not alone. And your worries are not unfounded.

Many companies have found themselves suddenly wrapped up in costly, time consuming, and exhausting battles over wage and hour issues. There are many ways for businesses to end up in these situations, including misclassification of employees, inefficient time and attendance tracking, and payroll mistakes.

The good news is that many of these problems can be avoided with some relatively simple strategies:

  • Paying careful attention to individual job descriptions and duties will help make sure your employees are classified correctly.
  • Investing in time tracking and payroll systems that are easy, efficient, and accurate will ensure that your staff is paid correctly and on time.
  • Consulting with outside experts will keep you on the right side of wage and hour compliance.

If you don’t have an in-house expert on staff, consider working with an outside company who specializes in things like time tracking, payroll, and overtime.

Not only will finding the right compliance partner take work off your HR team’s plate, it will help reduce your business risk and keep things running smoothly. And that is time well spent.


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Photo by cunaplus