In: Accounting
Payroll Accounting 122
Explain how a state employee working in the area of public safety may use compensatory time off in lieu of overtime compensation. Under what conditions would an employee of a state receive cash for his or her compensatory time off?
Compensatory time off is Time off with pay in lieu of overtime pay for irregular or occasional overtime work. In other words we can say Compensatory time or Comp time is when employers compensate their employees for overtime hours with time off, instead of overtime pay. While comp time is a widespread practice, it is usually illegal for private-sector businesses (including private-sector nonprofit agencies) to compensate overtime-eligible (nonexempt) employees with comp time instead of overtime. These rules are housed under the Fair Labor Standards Act (FLSA).
State employees working in the area of public safety may accumulate compensatory time off up to 480 hours. The 480 hour limit represents 320 hour of overtime actually worked at the one and one-half overtime rate. The employees may “bank” their hours and use them later one-half during the course of their employment and as time off at time.
An employee would be paid for compensatory time off in the following two conditions:
a) At the time of the termination of employment.
b) Upon reaching the “bank” maximum of 480 or 240 hours.