Applicability

The following information applies to General Schedule (GS), and Federal Wage System (or Wage Grade) employees who are Fair Labor Standards Act (FLSA) exempt (not covered) and non-exempt (covered). Foreign Service Officer candidates serving under limited appointments prior to being commissioned as Foreign Service Officers (those in pay plan FP) and commissioned Foreign Service Officers (those in pay plan FO) are covered in the section titled Premium Pay For Foreign Service Employees Serving Aboard. Time off for religious observance is available to all employees. 

Regularly Scheduled Overtime Work 

Regularly scheduled overtime work is overtime which is scheduled in advance of the week in which it is worked. Regularly scheduled overtime work is always paid at the employee’s overtime rate except that employees who work flexible (not compressed) schedules may choose compensatory time in lieu of payment if management has established a compensatory time policy and extends the choice to them. Except as noted under this heading, compensatory time may not be granted except as compensation for irregular or occasional overtime work (5 CFR 550.114). 

Compensatory Time for Irregular or Occasional Overtime Work - Discretionary with Operating Units

Irregular or occasional overtime is overtime which is worked in the same week in which it is authorized and is payable at the employee's overtime rate. Heads of operating units have the discretion to establish a policy whereby a FLSA exempt employee with a rate of basic pay in excess of the maximum for GS-10 will be compensated for irregular or occasional overtime work by an equal amount of compensatory time off. 

When management does elect to establish the policy outlined under this heading, any FLSA non-exempt employee and any FLSA exempt employee earning less than the maximum for GS-10 may elect compensatory time if presented a choice but may not be required to take it in lieu of overtime pay. 

Timeframes for Use of Compensatory Time 

On March 15, 2007, the Office of Personnel Management (OPM) issued final regulations setting timeframes for the use of compensatory time off earned in lieu of irregular or occasional overtime worked. Under the new regulations, compensatory time that is unused and was earned: (1) May 14, 2007, or later, must be used no later than 26 pay periods after the pay period in which it was earned and reported on the time and attendance (T&A) report; or (2) prior to May 14, 2007, must be used by the end of the pay period ending three years after May 14, 2007, unless excepted due to an exigency of the public service beyond the employee’s control. 

When Unused Compensatory Time Hours Must be Paid

An employee who is FLSA non-exempt must receive payment for unused compensatory time hours if the employee: (1) fails to use the compensatory time off within the required 26 pay period or the 3-year timeframes; or (2) transfers to another agency or separates from Federal service before the expiration of the 26 pay period or the 3-year timeframes.

Both FLSA non-exempt and exempt employees, including Schedule C employees, must receive payment for unused compensatory time hours if they separate from federal service or are placed in LWOP status: (1) to perform service in the uniformed services (as defined under 38 U.S.C. 4303 and § 353.102); or (2) due to an on-the-job injury with entitlement to injury compensation (under 5 U.S.C. Chapter 81).

The employee must receive payment for unused compensatory time if failure to use the compensatory time off is due to an exigency of the service beyond the employee’s control. 

The employee must receive payment for unused compensatory time if he/she moves from a FLSA non-exempt to a FLSA-exempt position and has unused compensatory time to his/her credit that was not used in the required 26 pay period or 3-year timeframes. The compensatory time must be paid, at the overtime rate at which it was earned, even if the bureau policy for FLSA-exempt employees is to forfeit compensatory time unused within the required timeframes. 

Losing operating units are responsible for liquidating balances of compensatory time by paying FLSA non-exempt employees the FLSA regular rate, and FLSA-exempt employees the overtime rate in effect when each hour of the time was earned. 

When Unused Compensatory Time Hours May be Paid

FLSA-exempt employees who fail to use accrued and accumulated compensatory time off within the required 26 pay period or the 3-year timeframes, who transfers to another agency, or who separate from Federal service before the expiration of the 26 pay period or the 3-year timeframes may: (1) receive payment for the unused compensatory time in an amount equal to the amount of overtime pay the employee would otherwise have received for hours of the pay period during which compensatory time off was earned by performing overtime work; or (2) forfeit the unused compensatory time off.

The decision to pay or forfeit unused compensatory time hours for FLSA-exempt employees once the required timeframes are reached is based on the specific written policy of the bureau/operating unit. However, bureaus/operating units do not have the discretionary authority to waive the time limits nor defer payment or forfeiture. 

Disposition of Compensatory Time When Employees Move Within the Department 

Heads of operating units have the discretion to accept accrued compensatory time of employees who move between operating units of the Department. In accepting transferred accrued compensatory time, gaining bureau/operating units should be aware that they are agreeing to accept the financial liability incurred for which they have derived no benefit, did not authorize or approve, and may not have budgeted. Agencies may limit this liability by establishing a ceiling on the number of compensatory time hours that will be accepted for transfer.

Disposition of Compensatory Time When Employees Move into the Senior Executive Service (SES)

When employees move into a Senior Executive Service (SES) position, they should be given the opportunity to use accrued compensatory time off prior to the transition into the SES. Once an employee moves into the SES, any unused compensatory time hours will be forfeited or paid out based on the policy of the applicable bureau. Unused compensatory time hours will not be held in abeyance for later use or payment. 

Compensatory Time is an Operating Unit Liability

Managers should be well aware of the amount of compensatory time hours granted to employees as each accrual creates an operating unit liability. A manager should not continuously grant compensatory time to an employee that, given the timeframes for use, and the employee’s anticipated work requirements, he or she would not be able to use. Similarly, a manager should arrange the work requirements of an employee with accrued compensatory time hours so the employee has the opportunity to use his or her compensatory hours within the required timeframes and avoid potential forfeiture, if applicable. In as much as accrued compensatory time is an operating unit liability, management is not precluded from establishing an upper limit or cap on the number of accruals permitted to further limit liability and remain within established or anticipated budget constraints.

Crediting Regularly Scheduled Overtime 

Employees who work regularly scheduled overtime are entitled to be paid for every minute of work. Employees who work only a few minutes beyond a quarter-hour increment of regularly scheduled overtime will be paid for an additional quarter-hour.

Crediting Irregular or Occasional Overtime 

Employees who work irregular or occasional overtime will have their work time rounded to the nearest full quarter-hour; eight or more minutes will be rounded up to the next quarter-hour, and less than eight minutes will be considered part of the previous quarter-hour.

Using and Recording Overtime and Compensatory Time Off 

Overtime work, including compensatory time off granted in lieu of irregular or occasional overtime, may not be scheduled or recorded in less than quarter-hour increments and will be recorded on the time and attendance report (i.e., webTA) in not less than quarter-hour increments. It may not be recorded until actually performed. Overtime work performed after the cutoff for submitting webTAs will be recorded on a corrected webTA report. Compensatory time may not be used to liquidate or reduce a balance of advanced annual or sick leave (45 Comp. Gen. 243).

Compensatory Time and the Biweekly Maximum Earnings Limitation

An employee who is prohibited by reason of the maximum limitation on premium pay from receiving overtime compensation (see section on Limitations of Premium Pay) may not elect to receive compensatory time off in lieu of prohibited overtime pay. (26 Comp. Gen. 750; 37 id. 362.) 

Compensatory Time and Night Differential 

Compensatory time may not be granted with night differential unless the employee works a flexible alternative work schedule. 

Compensatory Overtime Work for Religious Observance 

Eligibility. (5 U.S.C. 5550). Any employee including Senior Foreign Service Officers and members of the Senior Executive Service, may elect to work additional hours for the purpose of taking time off without charge to leave when personal religious beliefs require that the employee abstain from work during certain periods of the workday or workweek. Any employee who elects to work additional hours for this purpose may be granted (in lieu of overtime pay) an equal amount of time off (hour for hour or quarter hour increment thereof) from his or her scheduled tour of duty. 

NOTE: Most religions have a positive requirement, i.e., that an individual attend a service on a particular day as opposed to abstaining from work. Many hold services at night or at noon so that the requirement can be met without inveighing on the employee's work requirement. Annual leave, compensatory time, credit hours under a flexible work schedule may be used for religious observance (SES employees may not ear/use compensatory time or credit hours for this purpose). If none of these is applicable to the employee's situation, a valid request under this paragraph should only be disapproved if modifications in work schedules brought about by such requests would clearly interfere with mission accomplishment.

Payment for Unused Religious Compensatory Time. An employee who requests to work additional hours for religious observance may not later receive premium pay for this work. This is a matter of regulation; no exception can be made. However, the employee is entitled to receive his or her rate of basic pay for any positive religious compensatory time balance remaining to his or her credit at the time of separation or transfer to another agency.

Exception to the Biweekly Maximum Limitation. Employees who have reached the maximum limitation on premium pay may earn and use time for religious observances despite the fact that they are not otherwise entitled to premium pay or compensatory time. 

Record Separately. Timekeepers must record compensatory time earned and used for religious observances separately from other compensatory time. 

Use Before Earned. An employee may work compensatory overtime for religious observance before or after the grant of compensatory time off. If used in advance of earning, the advance must be repaid by working additional hours. Heads of operating units should establish a policy with respect to the timeframes in which advanced compensatory time for religious observance is to be repaid. If no such policy is established by the operating unit, employees are to repay advances by the end of the third pay period after use of the advanced compensatory time off. Advances that not “worked off” within the three pay period timeframe are to be deducted from accrued and accumulated annual leave. 

Updated October 15, 2008.