PIM 64: Compensatory Time Off & Overtime Pay for SHRA and EHRA Non-Exempt Employees
Dated: March 1, 2017
Category: Compensation & Position Management
Contact: Director of SHRA Position Management, 7-0654
Introduction
Eligible employees who work more than forty (40) hours in a workweek shall be compensated in one of two ways: compensatory time off or overtime pay. It is the State’s and University’s policy to award compensatory time off instead of monetary compensation for hours worked beyond forty (40) in a given work week, whenever possible. However, management has the discretion to provide overtime pay based upon fiscal availability and operational needs of the work unit.
Employees must receive prior supervisory approval before working hours in excess of forty hours (40) per week. Working overtime without supervisor approval may result in disciplinary action.
Eligibility
All SHRA and EHRA permanent and temporary employees who are subject to the wage and hour provisions of the Fair Labor Standards Act (FLSA non-exempt) are entitled to overtime compensation.
SHRA/EHRA Probationary, Permanent, or Time-limited Employees: The FLSA exemption status of the employee’s position is determined by the Office of Human Resources. All SHRA and EHRA ‘non-exempt’ employees are eligible to receive either overtime pay or compensatory time off. All SHRA and EHRA ‘exempt’ employees are not eligible for overtime pay or compensatory time off under this policy.
Temporary Employees: All temporary non-exempt employees, including student employees, are eligible to receive overtime pay only, not compensatory time off.
Coverage
Eligible employees earn time-and-one-half for all hours worked more than 40 hours in a workweek. An employee must work more than 40 hours to earn overtime compensation. Paid time that is not considered time worked (e.g., most leave or paid time off packages) does not count as time worked for the purpose of determining employee eligibility for overtime compensation. Therefore, an employee cannot earn overtime compensation during a week in which they are also using leave.
Working more than eight (8) hours in a workday does not necessarily constitute overtime. Overtime occurs only after working more than forty (40) hours in a workweek.
Management should provide as much notice as possible of the need to work overtime so that employees may make any arrangements necessary to enable them to perform the overtime work. Management must ensure that funds are available before authorizing overtime work.
Note: Some work units may require occasional or regular mandatory overtime as a condition of employment. Such a requirement must be explained to job candidates during the interview and selection process.
Avoiding Overtime Liability
If an employee works more than their regularly scheduled hours on one day in the workweek, management may allow or direct the employee to take off an equal amount of time during the same work week (without charging to leave). By doing this the total work time does not exceed forty (40) hours for the workweek. The University does not have a policy that allows equal time off (hour for hour) in another week.
Compensatory Time Off
Compensatory time off is the University’s first option for compensating employees for overtime. However, management may consider existing workloads, staffing requirements, and availability of funds in deciding which compensation option to use.
- All probationary, permanent, or time-limited SHRA and EHRA non-exempt employees are eligible to receive either compensatory time off or overtime pay.
- All temporary employees are eligible to receive overtime pay, not compensatory time off.
- Employees must use any compensatory time off before all other leave types, excluding sick leave.
Compensatory time off is paid time off equal to one-and-one-half times the amount of time worked more than 40 hours in a workweek. Employees who are scheduled to work less than 40 hours per week may earn compensatory time off for hours worked up to 40 hours. These hours are known as compensatory gap time.
Example 1: A full-time employee who works 44 hours in a work week would receive the 40 hours of pay and 6 hours of compensatory time off (4 hours x 1.5).
Example 2: A part-time employee who is scheduled to work 30 hours a week but works 35 hours would receive the 5 hours of compensatory gap time off (5 hours x 1.0).
When the compensatory time option is selected, the time off must be scheduled by the supervisor. Every effort should be made to accommodate the preference of the employee when scheduling compensatory time off. Compensatory time off may be used for any purpose.
The maximum amount of compensatory time off an employee may accrue at any time is 240 hours (160 hours of work x 1.5), prorated for part-time employees.
Paid Overtime
When management selects the paid overtime option, an eligible employee who works more than forty (40) hours in a workweek is paid overtime at the rate of ‘time-and-one-half’ for all hours worked over 40.
The additional pay will be included within the next two (2) pay periods following the period in which the overtime was worked. Lack of funds does not relieve a department from its liability to compensate overtime work at the rate of time-and-one-half.
Payouts & Transfers
Accrued compensatory time represents a financial obligation to the University. As noted above, management must ensure that funds are available before authorizing overtime work. Lack of funds does not relieve a department from its liability to pay accrued compensatory time off either in the form of additional time off or as paid compensation.
Under the following circumstances, accumulated and unused compensatory time off will be required to be paid to the employee as compensation.
- Any accrued compensatory time in excess of the 240-hour maximum will be paid out as compensation. Notifications will be sent to departments once any employee reaches 160 hours of total accrued compensatory time off. Once an employee exceeds the 240-hour maximum, the Payroll Office will initiate payment to the employee of accrued compensatory time off that will reduce their total accrued compensatory time off down to 200 hours. Departments may implement internal policies that help meet department-specific business needs but fall within these guidelines.
- Compensatory time off shall be taken within twelve (12) months of the date on which it was accrued. If management is not able to schedule the compensatory time off within this time period, the liability must be paid to the employee no later than in the next pay cycle following the end of the 12 months.
- When an employee leaves the University or transfers to any other position within the University, the employee will be paid for all accrued compensatory time off in the next available pay period. The department in which the compensatory time was earned is responsible for the related budget.
- If an employee’s FLSA status changes from Non-Exempt to Exempt designation, the employee will be paid for all accrued compensatory time off in the next available pay period. The department in which the compensatory time was earned is responsible for the related budget.
Supervisors may request payout of accrued compensatory time off for any/all employee(s) by completing the payout request form on the Payroll Office forms web page and obtaining all necessary departmental and divisional approvals (funding, etc.). Employees must have more than forty (40) hours of accrued compensatory time off to receive consideration for payout.
If you feel that you need to request an exception to any provisions of this PIM, please contact the Director of SHRA Position Management at 7-0654. .
Note: Requirements related to payments of accrued compensatory time off do not apply to other types of leave balances (e.g., sick leave, vacation leave).
Recordkeeping
Each department is responsible for recording and monitoring paid overtime and compensatory time off for its employees within the University’s time and leave reporting systems.
Questions
If you have questions about this policy, please contact the Director of SHRA Position Management in the Human Resources Department.
Related Subjects
NC OSHR Policy: Hours of Work and Overtime Compensation
NC OSHR Policy: Compensatory Leave
PIM Number: 64
PIM Category: Compensation and Position Management