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 North Dakota, as in other states, the use of compensatory time off in lieu of overtime pay for government employees is subject to the provisions of the Fair Labor Standards Act (FLSA). Under the FLSA, federal, state, and local government employees who work overtime may be eligible to receive compensatory time off instead of cash overtime pay, provided certain conditions are met. This option is typically not available to private sector employees, who are generally required to be paid overtime in cash if they are nonexempt under the FLSA. Exempt employees, often in executive, professional, and administrative roles, do not usually receive overtime pay and therefore the question of compensatory time off is not applicable in the same way. For nonexempt government employees who receive comp time, it must be used within 26 pay periods or the employer may be required to pay them 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, but they cannot provide less protection than the FLSA requires.