Thursday, September 6, 2007

Must an employer pay accrued compensatory time at my termination?

The answer is most likely, "Yes."

Workers are divided in two classes: (1) non-exempt employees who must be paid overtime; and (2) exempt employees who are entitled to overtime.

I wrote here that a private-sector employer generally cannot grant time off in lieu of of overtime to non-exempt employees. In other words, employers usually cannot give "compensatory time" instead of overtime wages to its hourly workers.

But, what about exempt employees? The law does not prohibit or require that an employer give compensatory time to exempt employees. Employer are free to do as they wish. Some employers reward their exempt employees by awarding compensatory time off if they work more than 40 hours in a week. In such case, the employee accrues "comp time" for work.

What happens to accrued comp time at the employee's termination? In my view, it must be paid. It is no different than accrued vacation. Catapult v. Wolf, discussed many times on this blog, established that accrued vacation is no different than earned wages and must be paid out at termination. All of this flows the Maryland Wage Payment and Collection Law's definition of wages, which includes "any . . . remuneration promised for service."

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