Organizational Wellness

Understanding Comp Time and How to Use It

Jul 14, 2023
Last Updated May 10, 2024

Comp time, or compensatory time off, is a practice that can help HR leaders support their employees’ work-life wellness. It allows staff to take time off during the week in exchange for working additional hours beyond their regular shift. While there are potential benefits to implementing comp time policies, it can be complex and requires careful consideration. 

Before deciding if comp time is an option for your organization, it’s important to assess the legal requirements and explore how to use it effectively. Like any HR policy, it has its own pros and cons that will shape if it’s a good choice for your company.


What is Comp Time?

Compensatory time off is paid time off (PTO) employees earn for working additional hours instead of receiving overtime pay.

With comp time, overtime hours are counted as one and a half times their value. So instead of paying an hourly employee time-and-a-half for work done over the standard 40 hours per week, you can offer your staff equal time in paid hours or days off.

For example, if an employee works 48 hours in what should be a 40-hour workweek, that is eight hours of overtime. One and a half times eight is 12. This means they've accrued 12 hours of compensatory time and are entitled to take 12 hours of paid time off. Depending on the organization's rules, the employee may be able to choose when to take this time off or select from a specific date range.

Comp Time Policies

Before we dive deeper, let’s take a look at the legal landscape surrounding comp time. 

According to the Fair Labor Standards Act (FLSA), comp time policies differ between the public and private sectors. Most organizations that are permitted to provide comp time are government agencies.

According to the Department of Labor, comp time is not allowed in the private sector for non-exempt employees. In the public sector, however, employees are entitled to benefit from comp time instead of overtime pay.

So, while comp time can be a fantastic tool for rewarding and motivating employees, consider familiarizing yourself with the legal aspects to ensure your policy remains compliant and fair for everyone involved.

Benefits of Offering Comp Time

Comp time can offer several advantages for both employees and employers. Here's a list of some key benefits:

For Employees

  • Improved work-life wellness: Helps employees take the time to better manage and balance their personal and professional lives.
  • Increased job satisfaction: Employees may feel more valued and motivated when they're rewarded with extra time off instead of monetary compensation for their many extra hours of work.
  • Flexibility: Many employees can choose when to take time off and adjust their work schedule, making attending to personal matters or planning vacations easier.
  • Reduced burnout: Team members are less likely to experience burnout due to excessive overtime work.

For Employers

  • Cost savings: Implementing a comp time policy can be more cost-effective than paying overtime wages, potentially saving the company money in the long run.
  • Enhanced employee retention: A well-designed comp time policy can improve employee satisfaction and loyalty, reducing turnover rates.
  • Increased productivity: Happier and well-rested employees are often more productive and engaged, ultimately benefiting the organization.
  • Positive company culture: Offering comp time can contribute to building a supportive and flexible work environment, fostering a positive company culture that attracts top talent.
  • Easier workforce management: Comp time can help employers manage their workforce more efficiently by allowing them to redistribute workload during peak periods and then compensate employees with time off during slower times.

Designing a Compensatory Time Policy

Once you understand the legal requirements, it's time to focus on designing a fair and effective comp time policy. To prepare your policy, here are a few handy tips:

  1. Start by setting clear guidelines that outline how employees can earn and use comp time, including any limits or restrictions. This could be done verbally and in writing via an employee handbook or other company document. For example, you may set a limit of 40 hours of comp time per year.
  2. Use a timesheet to accurately and easily track hours for compliance and fairness. Consider using HR software or time-tracking tools to help with this task. Examples of tools include TimeClock PlusIntuit QuickbooksReplicon, and more.
  3. Ensure that all employees know the policy and understand how it works. Using inclusive language when presenting your policy will help make it accessible to everyone, regardless of their background or experience level.
  4. Make it easy for employees to ask questions or voice concerns. You can do this by setting up a dedicated help desk or manager available to answer any questions they may have.

By following these practical tips, you'll be well on your way to crafting a successful comp time policy that benefits both your employees and your organization.

Assessing Comp Time Usage

In addition to setting yourself up for success, consider conducting regular reviews of your comp time policy after you've launched it. Periodically assessing your policy will help you stay current with any changes in laws and regulations and identify areas for improvement. You can use these reviews as an opportunity to gather feedback from employees and address any concerns they may have.

By consistently evaluating and fine-tuning your policy, you'll maintain a compliant and effective comp time system that benefits your employees and your organization. 

Harnessing Flexible Benefits to Employee Wellbeing

Flexible policies like comp time can help HR leaders meet the workforce’s increased demand for autonomy. To create a truly supportive and nurturing environment, consider a suite of employee-centric policies, such as flexible schedules that accommodate individual needs and preferences or wellness dollars that employees can spend how they choose. 

A flexible wellbeing subscription like Wellhub allows HR leaders to empower their employees and have access to a wide variety of activities while keeping them engaged and motivated.

With Wellhub, employees are able to choose from thousands of activities near them, reducing stress and helping them reach their personal goals however they choose. It’s an easy-to-use solution that helps HR leaders provide a comprehensive wellness package.

If you want to learn more about boosting workforce wellness, reach out to a Wellbeing Specialist today!

Company healthcare costs drop by up to 35% with Wellhub! (* Based on proprietary research comparing healthcare costs of active Wellhub users to non-users.) Talk to a Wellbeing Specialist to see how we can help reduce your healthcare spending!




Wellhub Editorial Team

The Wellhub Editorial Team empowers HR leaders to support worker wellbeing. Our original research, trend analyses, and helpful how-tos provide the tools they need to improve workforce wellness in today's fast-shifting professional landscape.


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