Why Overtime is Safer
Why is it safer to pay overtime versus comp time? For the most part, most state labor departments also require any hours worked by non-exempt employees (usually hourly workers) over 40 hours must be paid at time-and-one-half. No employer wants to land themselves in trouble for not paying the employee for work performed.
These laws also apply to exempt employees who say work on a commission basis—at the end of the pay period if commissions aren’t accomplished, the employee must be paid at least minimum wage for forty hours worked and time-and-one-half for any overtime. Most salaried administrative or executive employees are exempt from overtime pay.
Although it’s true courts will often look to written company policies on comp time and overtime, judges frown on employers attempting to force employees to work extra for unpaid time off and will take the side of the complaining employee—and that means you’ll be forced to pay the overtime (and even fines or other judgment fees), so why not abide by the overtime laws in the first place?
If you do choose to offer compensatory time off, make sure you discuss the option in a group format with every employee in attendance, ensure that everyone is eligible, how the time can be banked and make sure they understand they must use it or lose it. If the policy is agreeable to all, you will then need a written policy with employee-signed acknowledgment pages to prove the program was agreed to by all; and above all, if an employee leaves the company for any reason, make sure he understands how these extra hours (overtime or comp time) will be paid.
Finally, I personally believe in my experience in human resources, it’s simply not smart to offer comp time—there are too many exceptions to the rule and the Wage and Hour Division’s Part 553 that discusses compensatory time off is full confusing examples that if you don’t fully understand them could end in disaster for your company.