What are the differences between compensatory time and paid time off?

Compensatory time, sometimes referred to as comp time, and paid time off (PTO) are both forms of time away from work but differ in several ways. Compensatory time is a form of compensation for working overtime hours, and is usually offered to employees of public agencies or companies that employ more than 15 workers. This type of time off is often offered instead of paying time-and-a-half for overtime hours, which is the traditional overtime wage calculation. Compensatory time is taken in lieu of pay, and must be ‘banked’ or saved for future use. It cannot be cashed out, and is essentially a “time off in lieu of pay” form of compensation. This form of time off is regulated under the federal Fair Labor Standards Act (FLSA). Paid time off, or PTO, is a form of time off that is generally offered by most private employers. It is time off with pay for vacation, illness, holidays, personal days, etc., and can be taken at the discretion of the employee or employer, depending on the company’s policy. Paid time off is not mandated by the FLSA, and is often part of an employee benefits package. Unlike compensatory time, it does not require employees to work overtime in order to bank hours for future use, and can usually be cashed out if an employee chooses to do so.

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What are the differences between compensatory time and paid time off?

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