"Comp Time" Instead of Overtime in California - Is this Legal?

For many hourly employees who work more than 8 hours per day or 40 hours in a week, their employer may offer compensated time or "comp time" instead of paying overtime. The most common question asked - is this legal?

The short answer is yes, but employers must follow specific procedures and protocols to institute a comp time system. California Labor Code § 204.3 allows comp time instead of overtime if all four of the following conditions are met:

• the employer and employee agree in writing to pay comp time
• the employee requested in writing to receive comp time
• the employee is regularly scheduled to work at least 40 hours per week, and
• the comp time is paid at the equivalent overtime rate the employee would earn.

Restrictions on Comp Time

There are two major restrictions on paying comp time instead of overtime:

• Once an employee has accrued 240 hours of comp time, the employee must be paid for any additional overtime hours.
• An employer cannot institute a "use it or lose it" policy since comp time is considered earned wages

Also, certain employees in specific industries must be paid overtime and cannot be provided comp time. For example, employees in manufacturing, public housekeeping, many agricultural employees and employees in the amusement and recreation industries are not entitled to be paid comp time and must be paid overtime.