What is compensatory time off (comp time)?

Compensatory time off, often referred to as "comp time," is specifically defined as paid time off granted to employees in lieu of overtime pay for hours worked beyond their standard schedule. This means that instead of receiving additional pay for extra hours worked—usually at a higher rate—employees earn time off that can be taken at a later date.

This approach allows both employers and employees flexibility; employees can manage their work-life balance more effectively by taking time off when needed, while employers can control labor costs by offering time off as compensation instead of direct pay. This system is commonly utilized in certain sectors, particularly in government jobs, where regulations allow such practices.

The other provided options do not accurately define compensatory time off. An unpaid leave of absence refers to time away from work without pay and does not involve any compensation. An extra incentive for working overtime typically involves additional pay, not the time-off arrangement described by comp time. A reduced work schedule to accommodate family responsibilities describes flexible scheduling rather than the concept of compensatory time off, which revolves specifically around compensating overtime work with time rather than a reduction of hours.