Under certain conditions, employees of federal, state, or local government agencies who irregularly or occasionally work overtime may receive compensatory time off—which is time off that is compensated—instead of receiving cash overtime pay. It is usually illegal for private sector businesses to compensate employees who are eligible for overtime pay (are nonexempt under the Fair Labor Standards Act) with compensatory time—often referred to as comp time.

Policies on compensatory time off in lieu of overtime pay vary between employees who are covered by the Fair Labor Standards Act (FLSA) and those who are exempt from it (usually executive, professional, and administrative employees). Exempt employees are generally not eligible to receive overtime pay. But whether an employee is exempt or nonexempt under the FLSA, the government employer (agency) may be able to approve comp time for an employee.

Compensatory time off in lieu of overtime pay generally must be used within 26 pay periods. If an FLSA nonexempt employee doesn’t take comp time within 26 pay periods, the employer may have to pay the employee for that overtime work at the overtime rate in effect during the pay period in which the overtime work was performed.

In Delaware, as in other states, the use of compensatory time off in lieu of overtime pay for government employees is permitted under certain conditions. This practice is in accordance with the Fair Labor Standards Act (FLSA), which allows federal, state, or local government agencies to provide compensatory time off to employees who work overtime on an irregular or occasional basis. However, this option is typically not available to private sector employees who are nonexempt under the FLSA; these employees must receive cash overtime pay. For exempt employees, who generally do not qualify for overtime, government employers may still approve compensatory time off. When compensatory time is granted, it must usually be used within 26 pay periods, or the employee may be entitled to receive payment for the overtime at the rate that was in effect when the overtime work was performed. It's important to note that specific state regulations can supplement federal law, so Delaware may have additional rules governing compensatory time for state or local government employees.