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Compensatory Time Off Definition

December 4, 2014

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Term Definition
Employers can offer employees paid time off for working overtime, in lieu of overtime pay or extra compensation. This is referred to as compensatory time off.

Extended Definition
CTO, or compensatory time off, is the paid time off given to the employee instead of overtime pay. The FLSA dictates that employees must be paid for all the hours worked, and cannot be given time off in place of pay. Employers are allowed to regulate compensation by the FLSA by controlling the number of employee work hours. To comply with FLSA’s requirements for CTO or overtime payment, employers will need to classify their employees as ‘exempt’ or ‘non-exempt.’ Exempt positions are granted CTO, while non-exempt workers are entitled to overtime pay.

Related Article:
A Look at Compensatory Time Off

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