Compensatory time refers to the practice of compensating employees with paid time off (PTO) rather than overtime pay for hours worked above 40 in a workweek. ... Instead of getting monetary compensation for those overtime hours, Tim would like paid time off to complete some personal errands.

What are compensatory wages?

Compensatory time and overtime pay are both methods of compensating employees for the extra time they put in at work. When compensatory time off is given to employees in lieu of overtime pay, the employee is entitled to an hour and a half of compensatory time off for every hour they worked.

Do you get paid for compensatory time?

Compensatory time, or comp time, is paid time off given to an employee instead of overtime pay. For example, you have an employee who works 45 hours in one week. Instead of paying that employee five hours at time-and-a-half, you offer five hours of PTO instead, in exchange for those extra hours worked.