Q. Like a lot of retailers, we make most of our money in three to four months of the year. My company employs about 15 workers. Most of these employees are part time, but some are full time. I attended a seminar recently where the leader said you could not offer compensation time to full-time workers. If I can’t do this, it would severely limit my ability to employ full-time staff. Can you help me better understand if I can or cannot offer comp time to my full-time employees?
A. Providing compensatory time (or “comp” time) is a common practice in some industries. This practice, giving an employee time off instead of paying the employee overtime, typically 1.5 times regular pay, can be used lawfully — sometimes.
Generally, state and federal laws require employers to provide nonexempt employees overtime pay, at 1.5 times their regular rate, when they work more than 40 hours in a work week. A retail sales person is almost always classified as nonexempt. Some employees, such as outside sales representatives or managers, are exempt from the overtime requirement.
I consulted Daniel Field, a partner with Morgan, Brown & Joy LLP, a Boston firm that focuses exclusively on representing employers in employment and labor law matters. Field warns, “Federal and state law prohibits the use of comp time for overtime-eligible employees in weeks in which they work more than 40 hours. Providing comp time instead of paying overtime in such a work week would constitute a violation of federal overtime law (called the Fair Labor Standards Act). This action would also violate Massachusetts and most other New England states’ corresponding overtime laws.”
Most employers are trying to reduce costs in this economy. However, even unintentional violations of wage and hour laws present significant problems for businesses because, under Massachusetts law, employees can recover triple damages and attorney’s fees from employers. Increasing numbers of businesses, even very small ones, have been facing expensive class-action wage-hour lawsuits brought by attorneys on behalf of employees.