Under the Fair Labor Standards Act (“FLSA”) and Colorado Overtime and Minimum Pay Standards Order (“COMPS Order”), non-exempt employees who work more than forty (40) hours in a workweek must be paid one and one half times the employee’s regular hourly rate for the overtime hours worked. If an employer fails to pay employees at the overtime rate for overtime, the employer may be liable for back pay for the all unpaid overtime hours, and liquidated damages (double the amount of back pay) if the violation if found to be willful. An employee who prevails on a FLSA claim in court is also entitled to recover attorneys’ fees and costs. The statute of limitations for overtime violations under the FLSA is generally two years, but may extend to three years for a willful violation.
Some employers provide non-exempt employees with “Comp time” (which is short for compensatory time), in lieu of overtime pay for overtime hours. Under this practice, the employer attempts to compensate employees for overtime hours with time off instead of overtime pay. To illustrate, an employee may work 56 hours in a work week. Rather than pay the employee for 16 hours of overtime, the employer allows the employee to take two days off at a later date. Some studies have indicated that up to 30 percent of employers have used Comp time to compensate employees for overtime hours.
Even though the practice is relatively widespread, employers must realize that the use of Comp time, instead of paying overtime, violates both the FLSA and COMPS Order for private employers. As stated on the website for the Colorado Department of Labor and Employment, “:The use of compensatory time for non-exempt employees is not allowed for employers covered under Colorado Overtime and Minimum Pay Standards Order (“COMPS Order”) #36. Compensatory time is defined as paid time off the job which has been earned and accrued by an employee in lieu of the appropriate wage payments for a specified pay period.” According to the site, “[n]on-exempt employees covered under the COMPS Order must be paid time and one-half of the regular rate of pay for any work in excess of forty hours per workweek, twelve hours per workday, or twelve consecutive hours without regard to the starting and ending time of the workday (excluding duty free meal periods).” https://www.colorado.gov/pacific/cdle/comp-time.
Employers should not be confused or misled by an exception that exists for public employers. Government agencies are allowed to use Comp time to compensate employees for overtime hours. This exception is found in Section 7(o) of the FLSA, and applies only to “Employees of a public agency which is a State, a political subdivision of a State, or an interstate government agency…” Because this provision is restricted to “public agencies,” courts have found that private companies are not allowed to use Comp time under this provision.
Further, the fact that an employee may agree to a Comp time policy – or express a preference for Comp time over overtime pay – is not a defense for a private employer. The employee may agree and still sue the employer later for providing Comp time as opposed to overtime pay for overtime hours worked. The obligation to pay overtime to hourly, non-exempt workers is a matter required by Federal and Colorado law, and cannot be changed by a private agreement (even if it is in writing and completely voluntary).