Small Business and the NLRB
By David D. Schein, President & General Counsel,
Claremont Management Group
www.claremontmanagementgroup.com
Application
of “Comp Time” in Lieu of Overtime Pay
A small business owner inquired about using “Comp Time”
for some employees. In the private workforce sector, Comp Time can only be used
for exempt employees. Those are employees who are not eligible for overtime.
So, an employer’s first challenge is to identify those employees who are exempt
from overtime. Second, most of the time, exempt employees are expected to work
as many hours as needed and many work 45, 50 or even 60 hours a week. So, Comp
Time is often just a day off to reward hard work and is not tracked on an
hour-for-hour basis. Third, if an employer wants to adopt a formal Comp Time
policy, such as is sometimes found in the public workforce sector, then the
employer has to decide at what point to reward exempt employees with Comp Time
and how to keep track of it.
Briefly, the following categories of employees may be
exempt from the requirement to pay overtime:
Executive Exemption –Executives and managers
Administrative Exemption – Employees managing a functional
area
Professional Exemption – Professionals, generally with a
4-year degree
Outside Sales Exemption – Actual field sales employees -
not applicable to inside sales persons
Computer Employee Exemption – Fairly close to the
Professional Exemption
Refer to this newsletter for more information on
exemptions from overtime at:
[Newsletter]
Some employers would like to use Comp Time for all employees, including non-exempt employees. This is hard to do under the Federal Wage-Hour law, which requires employers to establish a defined work week of 7 consecutive 24 hour periods. During that defined week, if a non-exempt employee works more than 40 hours, they must receive OT for the hours worked over 40 in the defined work week. This is true even if they only work say 30 hours the next week and could really use the pay in the next pay period. An employer generally cannot transfer hours through the "comp" process from one week to the next for non-exempt employees.
Some employers would like to use Comp Time for all employees, including non-exempt employees. This is hard to do under the Federal Wage-Hour law, which requires employers to establish a defined work week of 7 consecutive 24 hour periods. During that defined week, if a non-exempt employee works more than 40 hours, they must receive OT for the hours worked over 40 in the defined work week. This is true even if they only work say 30 hours the next week and could really use the pay in the next pay period. An employer generally cannot transfer hours through the "comp" process from one week to the next for non-exempt employees.
While many employers have heard about Comp Time, and some
try to implement it across the board, the unfortunate outcome is that they may
be found to have violated the Federal Wage-Hour laws. Employers also need to be
mindful of state and local wage rules that may be even more restrictive than
the Federal rules. For instance, some states require payment of overtime after
eight hours in a day, and not just 40 hours in a week.
