How to Calculate Comp Time: Formula, Caps, and Cash-Out Value

To calculate comp time, take the hours you worked over 40 in a single workweek and multiply them by 1.5. That result is the number of comp time hours added to your leave bank. The rule applies to non-exempt employees of state, local, or interstate government agencies who have a comp time agreement in place before the overtime is worked; private-sector non-exempt workers cannot receive comp time in place of cash overtime under federal law.¹

The Formula, Step by Step

The math has three steps. Each one uses a single workweek in isolation.

Step 1 — Find your overtime hours. Subtract 40 from your total hours worked in the workweek. Work 48 hours, and you have 8 overtime hours. Work exactly 40, and there is nothing to convert.
Step 2 — Multiply by 1.5. Eight overtime hours become 12 hours of comp time. Two overtime hours become three. Half an hour of overtime becomes 45 minutes.
Step 3 — Add the result to your comp time bank. Those hours are yours to use as paid time off later, subject to the accrual cap for your job type.

The 1.5 multiplier is the same for every covered non-exempt employee, whatever the job title or hourly rate.¹ It mirrors the cash overtime rate, so the value of what you bank matches what you would have been paid.

Getting the Inputs Right

The formula only works if you count hours from the correct workweek and value each hour at the correct regular rate.

Use One Workweek at a Time

An FLSA workweek is a fixed, recurring block of 168 hours: seven consecutive 24-hour periods.² It does not have to start on Monday or match the pay period. Once your employer sets the start day and time, it stays fixed.

Each workweek stands alone. You cannot average hours across two or more weeks. If you work 50 hours one week and 30 the next, the first week still generates 10 overtime hours and 15 hours of comp time, even though the two-week total averages to 40.

Know Your Regular Rate

Your regular rate is not just your base hourly wage. It includes non-discretionary bonuses and shift differentials.³ Earn $20 an hour with a $2 night-shift differential, and your regular rate is $22. The rate does not change the number of comp time hours you accrue (that is always overtime hours × 1.5), but it sets the dollar value of each banked hour when the time is eventually cashed out.

On-Call Hours May or May Not Count

Whether on-call time counts toward the 40-hour threshold depends on how restricted you are. On-call hours spent on the employer’s premises count as hours worked.⁴ On-call time at home, with freedom to use the time as you wish, generally does not. The more restrictions — a short response window, limits on personal activities — the more likely those hours push you past 40 and into overtime that generates comp time.

A Worked Example

Say you are a public works employee with a $22 regular rate. In one workweek you work 48 hours.

Overtime hours: 48 − 40 = 8
Comp time earned: 8 × 1.5 = 12 hours
Cash equivalent: $22 × 1.5 × 8 = $264, which is also 12 × $22

The 12 hours goes into your bank. If you cash it out later at the same $22 rate, you receive $264 — the same amount you would have received in cash overtime that week.

When the Calculation Stops: Accrual Caps

Federal law caps how much comp time a non-exempt public-sector employee can bank. The limit depends on the type of work:

480 hours for employees whose work involves public safety, emergency response, or seasonal activities, including police officers, firefighters, and paramedics.
240 hours for all other public-sector employees, including administrative staff, maintenance workers, and general municipal employees.

Once you hit the cap, the employer must pay cash overtime for every additional overtime hour worked.¹ Because of the 1.5 multiplier, the 480-hour cap represents 320 actual overtime hours worked, and the 240-hour cap represents 160 actual overtime hours. Employees in high-overtime roles can reach those numbers faster than they expect.

Exempt Employees Calculate Differently

The 1.5x formula applies to non-exempt employees. Exempt employees — those who meet the FLSA’s salary and duties tests — typically earn comp time at a straight 1:1 rate: one hour of extra work equals one hour of time off.⁵

For federal employees, both exempt and non-exempt workers must use their accrued comp time by the end of the 26th pay period after the pay period in which it was earned. If an exempt federal employee does not use the time within that window, the agency may either pay it out at the overtime rate in effect when it was earned or, in some cases, allow the time to be forfeited. Non-exempt federal employees must always be paid out.⁵

State and local government employers have more flexibility with exempt employees. Because exempt workers are not covered by the FLSA’s overtime provisions, employers can set their own accrual rates, caps, and use-or-lose policies for any bonus time off offered to exempt staff.

What Each Banked Hour Is Worth

The number of hours in your bank is set by the 1.5 formula. Their dollar value is set at the moment of payout.

Cash-Outs While Still Employed

A public employer can cash out accrued comp time at any point. The payment must be at your current regular rate at the time of the payout.¹ The employer can also choose to pay cash overtime for a given workweek instead of crediting comp time, even if an agreement is in place.⁶

Cash-Outs at Separation

When you leave a position — by resignation, retirement, or termination — the employer must pay out all unused comp time. The payout rate is the higher of:

Your final regular rate of pay, or
The average regular rate you received over the last three years of employment.

The “whichever is higher” rule protects employees whose pay may have decreased shortly before separation.⁷ If your final rate is $25 per hour but your three-year average was $27, the payout is $27 multiplied by the number of unused comp time hours.

Using the Time Once It Is Banked

Banked comp time is yours to request. The employer must grant a request to use it within a “reasonable period” unless doing so would unduly disrupt operations.⁸ What counts as reasonable depends on the agency’s normal operations, including regular schedules, predictable busy seasons, emergency staffing needs, and whether qualified substitutes are available. A collective bargaining agreement or written understanding can define the timeframe more specifically, and those terms control when they exist.

Mere inconvenience is not enough to deny a request. The employer must reasonably and in good faith anticipate that granting the time off would impose an unreasonable burden on delivering services to the public at an acceptable level.

A Note for Private-Sector Workers

The formula above does not apply outside government employment. The FLSA does not authorize comp time for non-exempt private-sector workers. If you work for a private company and are non-exempt, overtime must be paid in cash; a paid-time-off substitute is not a legal option under federal law, regardless of any agreement you sign.⁹ Legislation to change this — most recently the Working Families Flexibility Act, reintroduced in the 119th Congress — has been proposed multiple times but has not been enacted.¹⁰

1
Office of the Law Revision Counsel. 29 USC 207 – Maximum Hours
2
eCFR. 29 CFR 778.105 – Determining the Workweek
3
eCFR. 5 CFR 551.514 – Nondiscretionary Bonuses
4
U.S. Department of Labor. Fact Sheet 22 – Hours Worked Under the Fair Labor Standards Act
5
U.S. Office of Personnel Management. Fact Sheet – Compensatory Time Off
6
eCFR. 29 CFR Part 553 – Application of the FLSA to Employees of State and Local Governments
7
Office of the Law Revision Counsel. 29 USC 207 – Maximum Hours
8
eCFR. 29 CFR 553.25 – Conditions for Use of Compensatory Time
9
U.S. Department of Labor. Fact Sheet 23 – Overtime Pay Requirements of the FLSA
10
Congress.gov. H.R. 2870 – Working Families Flexibility Act