However, the Fair Labor Standards Act (FLSA) specifically authorizes public employers to provide compensatory time in lieu of paid overtime to their non-exempt employees. Under the FLSA, the public employer may provide for either form of overtime compensation or a combination of the two.

There are restrictions under the FLSA on the hours of compensatory time that a non-exempt employee may accrue in a year, after which the employer is required to provide paid overtime until the employees compensatory leave balance is reduced below this amount. The public entity should consult with its legal counsel to determine what limits apply to its employees.

The public employer should consult with its legal counsel to ensure that any policy that provides for options on the method of overtime compensation is uniformly applied to all of its non-exempt employees and is part of its written personnel policies.

The public entity may wish to review and discuss with its legal counsel the following AG opinions regarding the compensation of overtime including the application of compensatory time policies for exempt public employees:

AG Op. Nos. 90-619, 97-338A, 00-293, 01-0280, 01-311, & 02-398.