At the request of an employee, the head of an agency (or designee) may grant compensatory time off from an employee's tour of duty instead of payment under § 550.113 for an equal amount of irregular or occasional overtime work.

At the request of an employee, as defined in 5 U.S.C. 2105, the head of an agency (or designee) may grant compensatory time off from an employee's basic work requirement under a flexible work schedule under 5 U.S.C. 6122 instead of payment under § 550.113 for an equal amount of overtime work, whether or not irregular or occasional in nature.

The head of an agency may provide that an employee whose rate of basic pay exceeds the maximum rate for GS-10 (including any applicable special rate of pay for law enforcement officers or special pay adjustment for law enforcement officers under section 403 or 404 of the Federal Employees Pay Comparability Act of 1990 (Pub. L. 101-509), respectively; a locality-based comparability payment under 5 U.S.C. 5304; and any applicable special rate of pay under 5 U.S.C. 5305 or similar provision of law) shall be compensated for irregular or occasional overtime work with an equivalent amount of compensatory time off from the employee's tour of duty instead of payment under § 550.113 of this part.

Except as provided in paragraph (f)(2) of this section, an employee must use accrued compensatory time off to which he or she is entitled under paragraph (a) or (b) of this section by the end of the 26th pay period after the pay period during which it was earned. The head of an agency, at his or her sole and exclusive discretion, may provide that an employee who fails to take compensatory time off to which he or she is entitled within 26 pay periods after the pay period during which it was earned must—

Receive payment for such unused compensatory time off at the dollar value prescribed in paragraph (g) of this section; or

Forfeit the unused compensatory time off, unless the failure to take the compensatory time off is due to an exigency of the service beyond the employee's control, in which case the agency head must provide payment for the unused compensatory time off at the dollar value prescribed in paragraph (g) of this section.

Except as provided in paragraph (f)(2) of this section, compensatory time off to an employee's credit as of May 14, 2007 must be used by the end of the pay period ending 3 years after May 14, 2007. The head of an agency, at his or her sole and exclusive discretion, may provide that an employee who fails to take compensatory time off to which he or she is entitled by the end of the pay period ending 3 years after May 14, 2007 must—

Receive payment for such unused compensatory time off at the dollar value prescribed in paragraph (g) of this section; or

Forfeit the unused compensatory time off, unless the failure to take the compensatory time off is due to an exigency of the service beyond the employee's control, in which case the agency head must provide payment for the unused compensatory time off at the dollar value prescribed in paragraph (g) of this section.

Except as provided in paragraph (f)(2) of this section, an employee with unused compensatory time off under paragraph (a) or (b) of this section who transfers to another agency or separates from Federal service before the expiration of the time limit established under paragraphs (d) or (e) of this section may receive overtime pay or forfeit the unused compensatory time off, consistent with the employing agency's policy established under paragraphs (d) and (e) of this section.

If an employee with unused compensatory time off under paragraph (a) or (b) of this section separates from Federal service or is placed in a leave without pay status under the following circumstances, the employee must be paid for unused compensatory time off at the dollar value prescribed in paragraph (g) of this section:

The employee separates or is placed in a leave without pay status to perform service in the uniformed services (as defined in 38 U.S.C. 4303 and § 353.102); or

The employee separates or is placed in a leave without pay status because of an on-the-job injury with entitlement to injury compensation under 5 U.S.C. chapter 81.

The dollar value of compensatory time off when it is liquidated, or for the purpose of applying pay limitations, is the amount of overtime pay the employee otherwise would have received for the hours of the pay period during which compensatory time off was earned by performing overtime work.