‘Time‐Off Plans’: An Alternative To Comp Time

'Time-off plans' may be an efficient and economic way to manage employee pay. But how does an employer ensure a plan complies with their Fair Labor Standards Act?

Private employers seeking to take advantage of Fair Labor Standards Act provisions that allow "time-off plans" for non-exempt employees often face a conundrum: how to reconcile a "time-off plan" with the FLSA's overtime pay requirements?

The FLSA requires employers to pay non-exempt employees a minimum hourly wage and a premium pay rate for any work in excess of 40 hours per week. The congressional purpose behind the FLSA is twofold: (1) to bring about greater employment by providing a financial disincentive to employers who require overtime hours and (2) to compensate employees for the burden of a lengthier workweek.