If your business has employees who are non-exempt and work overtime hours, it is important to understand your obligations as an employer under the federal Fair Labor Standards Act (FLSA) concerning overtime pay and overtime credit accumulations. In short, you are required to compensate non-exempt employees for overtime hours worked, and that compensation must come in the form of pay unless you are a public employer, in which case it may also come in the form of overtime credit accumulations. Our Frisco employment law attorneys can provide you with more information to ensure that your business remains in compliance with Texas state and federal law.
Overtime Compensation Requirements
Under the FLSA, employers in Texas and throughout the country are required to compensate non-exempt employees for overtime work at the rate of 1.5 times their regular rate of pay. Overtime means any hours worked beyond a 40-hour workweek. The Texas Fiscal Management Division explains that overtime compensation can be provided to Texas workers in state agencies in one of the following two ways:
- Employee receives pay for overtime hours at the rate of 1.5 times the employee’s regular pay rate (e.g., if an employee’s regular pay rate is $10 per hour, overtime hours would be compensated at the rate of $15 per hour); or
- Employee takes compensatory time off at a rate of 1.5 hours for every hour of overtime they have worked.
When an employee is compensated for overtime hours worked through compensatory time off, the employee has what is known as overtime credit accumulations. Many employers describe an employee’s overtime credit accumulations as compensatory time off, or more simply “comp time.”
Overtime Compensation for Public Employees
Only public employers and public workers may be given compensatory time as compensation for overtime work. Indeed, according to the Texas Workforce Commission (TWC), “an extremely frequent misconception among private (non-public) employers is that it is permissible to pay non-exempt employees comp time in lieu of cash for overtime worked.” However, as the TWC clarifies, “not only does the statute on compensatory time apply only to public employers, but many private employers compound the error by giving compensatory time on a straight-time basis.”
To be clear, if you are a private employer, you cannot compensate a non-exempt employee for overtime hours with overtime credits or compensatory time off under the FLSA.
Maximum Amount of Overtime Credit Accumulations
Under Texas law, an employee eligible for comp time generally is not permitted to accumulate more than 240 hours of compensatory time off or overtime credit, which they can use to take as compensatory leave. However, there are certain exceptions. When an employee’s job requires the employee to engage in public safety activity, emergency response activity, or seasonal activity, then the employee may be able to accumulate up to 480 hours of overtime credit that they can use to take compensatory leave.
Any other leave time, such as holidays or paid sick leave, is not counted as part of the total amount of hours the employee can have in overtime credit accumulations.
Contact a Frisco Employment Law Attorney Today
If you have questions about compliance with overtime credit accumulation requirements and the FLSA, one of our Frisco employment law attorneys can assist you. Contact Simon Paschal PLLC today.
