Quoted from littlesal

74.12 Amend Resolution No. 3.12, adopted on January 1, 2012, appointing Lynn Fiorillo of
Rotterdam, New York to the position of Confidential Secretary to the Supervisor for a
one (1) year term commencing on January 1, 2012 through December 31, 2012 to
include the ability to earn compensatory time

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Compensatory Time Might Not Be Legal


It is generally illegal to give employees straight comp time -- one hour off for every extra hour worked -- rather than overtime pay.


Some employers adopt a policy of giving their employees compensatory, or "comp," time -- an hour off at some later date for every extra hour worked -- instead of paying them overtime. But these policies are generally illegal under federal law, at least for private employers (state and local governments can offer comp time, in certain circumstances). The reason? They preclude employees from collecting an overtime premium -- the extra pay to which they are entitled for working more than a set number of hours. (For more information on overtime, see Nolo's article When Must Employers Pay Overtime?)

This means that if you wish to give your employees time off instead of money for extra hours worked, you cannot simply establish an hour-for-hour policy (that is, letting the employee take an hour off for every hour of overtime worked).

Alternatives to Overtime

So what are the alternatives to simply paying the employee overtime? You may be able to rearrange an employee's schedule during a workweek to ensure that the employee does not work overtime. Under federal law, an employee who works no more than 40 hours in a week has not worked overtime and is not entitled to overtime pay. So, for example, an employee who works four 10-hour days and then has three days off need not be paid overtime.

If your state has a daily overtime standard, this may not be possible unless the law explicitly allows you and your employees to agree on an alternative workweek. A daily overtime standard means that workers are entitled to overtime if they work more than a set number of hours in a day, even if they ultimately work fewer than 40 hours in a week. California, Colorado, and Connecticut are among the states that have a daily overtime standard. To find out the rules in your state, contact your state labor department; you can find links at the federal Department of Labor's website, here.

You can also adjust an employee's hours during a pay period so that the amount of the employee's paycheck remains constant. To make this work, the employee must take an hour-and-a-half off for every extra hour worked. For example, if an employee who usually earns $1,600 every two weeks (or $20 an hour) works an extra 10 hours during the first week of the pay period, the employee is entitled to $300 in overtime pay -- 10 hours multiplied by one-and-a-half times the employee's hourly rate, or $30. If the employee took 15 hours off in the second week of the pay period, however, his or her paycheck would remain the same -- the employee would receive $300 in overtime pay, but would be docked $300 (15 hours multiplied by $20 an hour) for the time not worked. While you'll have less of the employee's time, it will help keep costs down.

For extensive information on the most important federal laws dealing with employment issues, see The Essential Guide to Federal Employment Laws, by Lisa Guerin and Amy DelPo (Nolo).

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February lOt 2010
Re: Request for Opinion
Compensatory Time
RO-09-0083
Dear_:
I have been asked to respond to your letter regarding the use of language within a
collective bargaining agreement which provides for compensatory time in lieu ofovertime for
employees working for a not-for-profit agency in Buffalot New York. Please accept my apology
for the late response to your request. Your letter states that the employees covered by the
agreement are social workers and counselorst the majority ofwhom make less than $516.1 Ot
presumably per work week. Your letter first asks whether the language contained in the
agreementt providing for the accumulation of compensatory time in lieu ofovertime, is legal,
andt second, whether the employer is obligated to "payout or buy backU time earned when an
employee leaves the employer's service.
1. Permissibility of Compensatory Time.
In answering your first question, the use of compensatory time in lieu ofthe payment of
overtime may be in violation ofArticles 6 (Payment ofWages) and/or 19 (Minimum Wage Act)
depending on the factual circumstances: Please be advised that although the prohibitions on
compensatory time in lieu ofovertime in these two Articles are similart the prohibitions are
nevertheless independent of each other.
Labor Law Article 6 (Payment ofWages).
Article 6 ofthe Labor Law sets forth the requirements for the payment of wages for
employees working within the State ofNew York. Wagest for the purposes ofthat Articlet are
defined in Section 190(1) as follows:
Tel: (51 457-4380, Fax: (51 485-1819
W. Averell Harriman State Office Campus. Bldg. 12, Room 509, Albany, NY 12240
http://www.labor.state.ny.us bceBs@labor.state.ny.us
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1. "Wages" means the earnings ofan employee for labor or
services rendered, regardless ofwhether the amount ofearnings is
determined on a time, piece, commission or other basis. The term
"wages" also includes benefits or wage supplements as defined in
section one hundred ninety-eight-c ofthis article, except for the
purposes of sections one hundred ninety-one and one hundred
ninety-two of this article.
Overtime pay, as you can see, undoubtedly fits within the definition ofwages as it is the
"earnings of an employee for labor or services rendered."
Section 191 ofthe Labor Law requires the timely paYment in full oian employee's
agreed upon wages and sets forth the frequency of such paYments for particular categories of
employees. For example, manual workers must be paid weekly and not later than seven days
after the end ofthe week in which their wages are earned (Labor Law §191 (1)(a)(i», while
clerical and other workers must be paid in accordance with the agreed terms of emplOYment, but
not less than semi-monthly, on regular pay days designated by the employer (Labor Law
§19l(1)(d». However, it is worth noting that Section 191 does not specify a period of time in
which an employer is required to pay employees working in a bona fide executive,
administrative, or professional capacity earning in excess ofnine hundred dollars a week.
Nothing in Section 191 relieves the employer ofthe obligation to pay an employee's
wages, including any required overtime or hours worked, within the time period allotted.
Accordingly, an employee within the coverage of Section 191 ofthe Labor Law may not be
given compensatory time in lieu of the payment ofovertime. Unfortunately, your letter does not
sufficiently describe the nature of the work performed by the individual workers so as to permit a
determination to be made as to whether such workers fit within the coverage of Section 191 of
the Labor Law.
Additionally, it is worth noting that workers not considered to be "employees" under
Article 19 ofthe Labor Law (see below), who are nevertheless "employees" under Article 6 of
the Labor Law, which contains a much more expansive definition ofthat term, must be paid
within the time period allotted by Section 191. In such a situation, an individual outside ofthe
coverage ofthe overtime requirements ofArticle 19 ofthe Labor Law must nevertheless be paid
wages earned, at the applicable rate, for the hours worked within the period prescribed by
Section 191 ofthe Labor Law.
Labor Law Article 19 (Minimum Wage Act).
Article 19 ofthe State Labor Law (Minimum Wage Act) and the regulations adopted
thereunder, require that employees be paid at a rate not less than one and one-halftimes their
regular rate ofpay for all hours worked in excess of forty for non-residential employees, or fortyfour
for residential employees per workweek. (see, Labor Law §650 et seq.; 12 NYCRR §1423.2.)
Employees exempted from overtime coverage by Sections 7 and 13 ofthe Federal Fair
Labor Standards Act (FLSA) are similarly required to be paid overtime, but at a rate not less than
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one and one-halftimes the minimum wage rate. (Id.) Nothing in Article 19, or the regulations
adopted thereunder, permits the substitution of future time off in lieu ofthe payment ofovertime;
rather, 12 NYCRR §142-2.2 clearly mandates that "an employer shall pay an employee for
overtime." Accordingly, Article 19 prohibits the utilization of compensatory time in lieu of
overtime for an "employees" under Article 19, regardless of such employees' exempt status
under the FLSA. However, it must be noted that should a worker not fall within the definition of
"employee" under Article 19 of the Labor Law, the protections contained therein and the
prohibition on compensatory time in lieu of the payment ofovertime contained in that Article,
are inapplicable. (see Labor Law §651(5); 12 NYCRR §142-3.12.)
Your letter states that your members work as social workers and counselors, have both
Master's and Bachelor's degrees, and while some may make more than $516.10, the majority
make less. While such a description certainly does not provide a basis upon which this
Department may evaluate whether the individuals in question meet any of the exclusions from
the definition ofemployee; the work performed, educational background, and amount made by
some ofthe workers indicates that some ofthe workers may fit within the exclusion for work in a
bona fide executive, administrative, or professional capacity. (see, Labor Law §651 (5)(c); 12
NYCRR §142-2.14(4).)
Accordingly, while compensatory time in lieu ofovertime is not per se prohibited by the
New York State Labor Law, its use is limited by Articles 6 and 19 to the situations in which an
individual is neither an employee as defmed by Article 6 of the Labor Law nor works in a bona
fide executive, administrative or professional capacity making more than $900 per week under
Article 6, nor falls within the definition of"employee" under Article 19 ofthe Labor Law.
Since your question arises out of terms of a collective bargaining agreement, it is
necessary to determine whether such terms may constitute a valid waiver of the statutory
protections contained in the Labor Law which the above discussion concludes are being violated.
In American Broadcasting Companies, Inc. v. Roberts, 61 N.Y.2d 244 (1984), the New York
State Court ofAppeals held that provisions ofthe Labor Law are waivable through a bona fide
collective bargaining agreement in which the employee received a desired benefit in return for
the waiver, so long as the waiver or modification of the statutory intent does not contravene the
legislative purpose ofthe statute. The Court held that where there was no express legislative
indication that waiver was precluded, "a bona fide agreement by which the employee received a
desired benefit in return for the waiver, the complete absence ofduress, coercion or bad faith and
the open and knowing nature of the waiver's execution" may effectively waive or modify the
benefit provided by the statute to the employees.
As stated above, a waiver of a statutory guaranteed benefit to a worker is only
permissible where the waiver does not contravene the statutes legislative purpose. QQ.) The
purpose ofthe New York State Minimum Wage Act was announced by the Legislature through
Labor Law §650, which provides, in part, that "[e]mployment ofpersons at these [sub-minimum
wages] insufficient rates ofpay threatens the health and well-being ofthe people of this state and
injures the overall economy." Agreeing to receive a rate of pay deemed to be insufficient by the
Legislature, even in exchange for some other desired benefit in return for the waiver, contravenes
this purpose. Therefore, the provisions contained within the Minimum Wage Act (Article 19) of
-4-

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Requirements to Buy Back Compensatory Time
The answer to your second inquiry, whether an employer is required to buy back
compensatory time, is not governed by the provisions ofthe New York State Labor Law and
would depend solely on the employment agreement. Section 198-c requires that all employees
be paid benefits or wage supplements, which are included in the term "wages" as defined by
Section 191(1) and is defined by Section 198-c(2) to include, but not be limited to,
"reimbursement for expenses; health, welfare and retirement benefits; and vacation, separation or
holiday pay," in accordance with the provisions ofthe employment agreement. An employer
may be subjected to criminal liability for a failure to pay such benefits and wage supplements
within 30 days ofthe payments being due. (see Labor Law §198-c(1).) However, Section 198c(
3) excludes employees working in a bona fide executive, administrative, or professional
capacity from its coverage. Since compensatory time in lieu ofovertime is only permissible
under Article 6 ofthe Labor Law where an individual is outside ofthe definition of"employee"
or is working in a bona fide executive, administrative, or professional capacity, Section 198-c
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cannot be construed to require that an employer buy back compensatory time. Therefore, the
Department would not have authority to enforce any requirement to pay back compensatory
time. It is important to note, however, that employees may have a private cause of action against
an employer for its refusal to buy back compensatory time. Should such a situation arise, I
suggest you consult with private counsel.
This opinion is based on the infonnation provided in your Jetter dated June 4, 2009. A
different opinion might result if the circumstances stated therein change, if the facts provided
were not accurate, or if any other relevant fact was not provided. If you have any further
questions, please do not hesitate to contact me.

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How much flexibility does a public employer have with compensatory time policies?    Top of Page



For public employers, the basic authorization to pay compensatory time in lieu of cash for overtime appears in Section 207(o) of the FLSA, which provides the following in subsection (2)(A):

A public agency may provide compensatory time under paragraph (1) only— (A) pursuant to— (i) applicable provisions of a collective bargaining agreement, memorandum of understanding, or any other agreement between the public agency and representatives of such employees; or (ii) in the case of employees not covered by subclause (i), an agreement or understanding arrived at between the employer and employee before the performance of the work.



Courts all across the country have for decades interpreted that provision as allowing public employers to simply dictate that employees will be paid for overtime with compensatory time. In other words, the agreement is formed by the public employer telling the employees they will be paid for overtime with compensatory time off, and the employees agree by staying employed, instead of quitting, as they would have a right to do. It is not really a choice for those who want to remain employed with that public employer.



The DOL's regulation interpreting that provision recognizes that reality, despite its indirect wording. 29 C.F.R. § 553.23(c) states in relevant part:

… The agreement or understanding to provide compensatory time off in lieu of cash overtime compensation may take the form of an express condition of employment, provided (i) the employee knowingly and voluntarily agrees to it as a condition of employment and (ii) the employee is informed that the compensatory time received may be preserved, used or cashed out consistent with the provisions of section 7(o) of the Act. An agreement or understanding may be evidenced by a notice to the employee that compensatory time off will be given in lieu of overtime pay. In such a case, an agreement or understanding would be presumed to exist for purposes of section 7(o) with respect to any employee who fails to express to the employer an unwillingness to accept compensatory time off in lieu of overtime pay. However, the employee's decision to accept compensatory time off in lieu of cash overtime payments must be made freely and without coercion or pressure.

What that boils down to is that a public employer may make acceptance of compensatory time a condition of employment, and the employee may not be coerced or pressured into accepting or keeping the job. Once continued employment is accepted, knowing that compensatory time will be paid, the agreement has been made and will apply.



In a landmark U.S. Supreme Court case, the Court stated: "Nothing in the FLSA or its implementing regulations prohibits a public employer from compelling the use of compensatory time." Christensen v. Harris County, 529 U.S. 576, 120 S.Ct. 1655, 1656 (2000). That was in the context of a policy requiring county employees to use their accrued compensatory time if the total accrued amount approached the 240-hour limit. If a city or county can require employees to use up their compensatory time, it can certainly make acceptance of compensatory time in lieu of cash for overtime worked a condition of employment.



Where a public employer can get into trouble is in the situation in which the non-exempt employee works overtime without having been told in advance or advised via a compensatory time policy or agreement that compensatory time will be paid in lieu of cash for overtime, and the employer simply gives compensatory time instead of paying for the overtime in the form of cash. That would be a problem under the law, since no prior "agreement" would have been made.



Before 1998, public employers were relatively limited in how they could control the accumulation and use of compensatory time by non-exempt employees who worked overtime. With exempt employees who were given compensatory time (an optional benefit, usually given on a straight-time basis), the public employer could control the use of the compensatory time any way it saw fit, since such compensatory time was not required by law. However, for non-exempt employees, compensatory time at the rate of time and a half is required if overtime is worked and if the employer does not want to pay cash for the overtime. A 1994 case from the Eighth Circuit, Heaton v. Moore, 43 F.3d 1176, 2 WH Cases2d 801, held that public employers can deny an employee's use of compensatory time only where such use would be "unduly disruptive" to the agency's operations; the ruling basically affirmed the DOL's regulation on that point in 29 C.F.R. §553.25(d). Put another way, a public employer cannot control a non-exempt employee's use of compensatory time, since it is the equivalent of cash -- just as an employer cannot specify how an employee spends cash earnings, the employer cannot determine how the employee will spend the compensatory time off.



That changed dramatically for public employers in the jurisdiction of the 5th Circuit Court of Appeals (Texas, Louisiana, and Mississippi), thanks to two 1998 court decisions. The first case was AFSCME Local 889 v. State of Louisiana, 145 F.3d 280, 4 WH Cases2d 1355 (5th Cir. 199, basically stating that a public employer's policy requiring employees to use compensatory time before using vacation time does not violate the FLSA. In that case, the court distinguished Heaton and made an interesting comment about not necessarily being in agreement with the Heaton ruling, but seeing no need to directly address the Heaton question (i.e., can an employer require employees to use compensatory time when they approach a certain threshold?). In the second case, Moreau v. Harris County, 158 F.3d 241, 4 WH Cases2d 1697 (5th Cir. 199, which was decided not quite four months later, the court called the 8th Circuit's reasoning in Heaton "flawed" and ruled that there is no FLSA violation if a public employer enforces a policy whereby it requires employees to take paid compensatory time off if their compensatory time balances approach a given threshold. The incentive for public employers, of course, is to do just what the Fifth Circuit's Moreau ruling allows: use up the compensatory time before the employee passes the 240- or 480-hour limit beyond which cash must be paid for overtime, and also keep the employee from using vacation time, which is often limited by "use it or lose it" policies or statutes that set maximum annual carry-over amounts. On May 1, 2000, the U.S. Supreme Court affirmed the latter ruling under a different case name, Christensen v. Harris County, holding that the FLSA does not prohibit employers from requiring employees to use compensatory time whenever their accrued balances approach certain limits.



Pitfalls of Illegal Compensatory Time    Top of Page



Employees who are paid with compensatory time, when they should be paid cash for overtime, could file wage claims under either the Texas Payday Law, the FLSA, or both. The payday law claim can only cover the 180 days preceding the date of the claim, so it would not cover compensatory time violations that occurred a year or two earlier. For the older violations, the FLSA could be used. Under either law, the employer would have to reckon with paying time and a half for each hour of overtime worked. In addition, under the FLSA, the employer may also have to pay an equal amount in so-called "liquidated damages", and possibly attorney's fees in the discretion of a court. If a court found that the employer had no reasonable basis for believing that it could give compensatory time in lieu of overtime pay, the FLSA claim could go back three years, instead of the usual two. An employer involved in such a claim should attempt to retroactively apply the principles of the "time off plan" noted above if the timing of the pay periods and reductions in hours coincided to the extent necessary to meet the requirements of that procedure.