Awarding comp time for extra hours worked is a common strategy that can backfire. The1. Are companies required to award comp time to their (Fair Labor Standards Act) lays out strict rules for what basis can be used for awarding comp time, when it's illegal to give comp time in lieu of cash overtime, and how extended pay periods, like two-week schedules, must be handled. ? If so, on what basis?
Private employers are not required to give exempt employees comp time. That said, the FLSA doesn't prohibit you from giving exempts comp time. And if you decide to do this, you may provide it on any basis, not necessarily one-and-one-half hours off for every overtime hour worked. You may, for example, provide comp time on an hour-for-hour basis.2. Is paying comp time to non-exempts in lieu of cash overtime legal?
No. Non-exempt employees working in the private sector must always receive cash overtime of time-and-a-half their regular rates for hours worked over 40 in a week. There's no leeway here; the law is crystal clear.
No. Under the FLSA, employers may not average hours over more than one workweek to avoid paying overtime. However, it does allow employers to set up a "time off plan" for non-exempts that allows employers to mitigate the costs of overtime in one week by reducing the hours worked in another week. The biggest problem in trying to use this plan is being able to reduce hours in another week without disrupting operations.
Here is how it would work: In week A, employee C works 44 hours. For week B, the employer reduces employee C's hours to 34 hours. This would result in the total wage cost for the biweekly period to average 40 hours. However, under the FLSA, you would still need to keep records of each week separately (including the amount of overtime paid in week A). You would not be allowed to record that employee C worked 80 hours for the two-week period.