Is “Comp Time” or Banked Time Legal?

There are a number of employers that offer compensation time (“comp” time) or offer to “bank” your overtime hours so you can take an extra day off later down the line. It is generally legal in California for an employer to pay comp time, subject to certain limits. However, not all employers are doing it the legal way.

Any “comp time policy” must be agreed to between the employer and the employee, or the authorized employee representative. This cannot just be a verbal agreement either. One of the conditions for legally paying hourly employees comp time is that a collective bargaining agreement, memorandum of understanding, or other form of written agreement must be made between the employer and the employee, or authorized employee representative, before any of the work is done.

Another requirement is that the employer must regularly schedule the hourly employee to work a minimum of 40 hours a work week, so part time employees aren’t eligible for accruing comp time.

Let’s say an employer has his employees regularly working 40 hours a week Monday thru Friday. After the employees have worked their 40 hours the employer offers to “bank” any overtime hours worked on the weekend instead of paying the employee’s overtime. For every hour of overtime that is worked, the employer is responsible for banking those hours at the regular overtime pay rate (one hour of overtime is equal to one-and-a-half hours at the regular pay rate). The employee can only accrue up to 240 hours at a time. Any overtime hours worked after that, must be paid out as overtime compensation.

If an employee requests time off to use their accrued comp time, they can do so within a reasonable time frame as long as it doesn’t disrupt the operations of the employer. If the employee quits or is terminated, the employer has the responsibility of paying out the employee all the unused compensating time they have accrued during the last three years of employment.

Published By:

Labor Law Office, APC

2740 Fulton Avenue, Suite 220
Sacramento, CA 95821

Office: (916) 446-4502
Email: [email protected]

2018-01-15T20:12:57+00:00 January 15th, 2018|Wage and Hour|