About Time

Business owners are constantly looking for flexible ways to manage labor costs while accommodating employee desires and giving employees more control over their schedules. Every so often, employers ask us if compensatory time, or "comp time," can be provided instead of overtime pay. However, employers should be aware that this area of the law remains unsettled for non-exempt employees. Under Michigan law, private employers may be able to offer comp time in lieu of overtime compensation, but a significant question remains: does federal law permit it?

Michigan's Improved Workforce Opportunity Wage Act expressly authorizes certain private-sector com time arrangements under certain circumstances: Employees must voluntarily agree in writing before the overtime is worked, comp time must accrue at one and one-half hours for each overtime hour worked, and the employer must provide at least ten paid days of leave per year in addition to accrued comp time to qualify.

The challenge arises because federal law prohibits such an arrangement. The Fair Labor Standards Act (FLSA) generally requires non-exempt employees to receive overtime pay for hours worked over 40 in a workweek. While the FLSA expressly permits comp time arrangements for state and local government employers, its comp-time provisions do not authorize similar arrangements for private-sector employers.

As a result, employers and employment law practitioners have questioned whether Michigan's private-sector comp-time statute can coexist with the FLSA. Until that issue is resolved, Michigan employers should proceed cautiously and consult legal counsel before relying on comp-time arrangements for non-exempt employees.

Wright Beamer is here to help you navigate federal and state wage-and-hour laws. Give us a call today at 248.477.6300.