PROACTIVE PRACTICE MANAGEMENT
My staff would prefer
to have compensatory time off instead of overtime pay. Would doing so be
in compliance with Arizona employment law?
wonder how the overtime pay rule got started? Some time ago, so did I.
Here’s a history lesson to provide a bit of background for the answer
to your question.
the time when our country was just recovering from the Great Depression,
people were willing to do anything for menial wages and employers took
advantage of this situation. Businesses known as “sweat shops” made
workers toil incredibly long hours while paying very little for their
time. Congress believed that imposing an overtime penalty on employers
would induce shorter working hours and help the nation solve its
economic problems by spreading work around. In 1938, the Fair Labor
Standards Act, or FLSA, was enacted to require employers to pay
nonexempt workers at least one and one-half times their regular rates of
pay for all hours worked in excess of 40 per week. The premium overtime
rule may have outlived its original purpose, but the law is still on the
books. The law still needs to be in place to protect employees from
unscrupulous company’s who would take advantage of workers by
requiring them to work long hours without overtime pay. Employers are
challenged in some cases with a changed work ethic among employees where
unemployment is significantly lower than seventy years ago. The job at
hand today is to inspire employees to do the job right, efficiently and
FLSA doesn’t require an employer to pay a worker for overtime simply
because he or she worked more than eight hours in a day. Generally, the
law mandates that hours are calculated by the week and pay is provided
accordingly. There is flexibility as to when the workweek can start; it
can begin on any day and any hour the employer establishes. Regardless,
each workweek stands alone; one can’t average two or more workweeks,
and one can’t manipulate the start of the workweek merely to avoid
People often times are confused about who is exempt from being paid overtime.
Most workers who are not required to be paid overtime pay fall into one of five categories:
administrative, and professional employees generally are paid a minimum
weekly salary and spend at least 80% of the workday performing duties
that require a measure of discretion and independent judgment.
In dentistry, the Professional employee is the closest example of what might constitute an exempt worker; perhaps even an Administrative employee. However, a test for these types of employees helps determine their exempt and non-exempt status:
one can determine from this quick test, dental personnel are typically
not exempt from overtime pay.
with that bit of history and education, I’ll address the question
regarding “Compensatory Time”. The practice of granting
hour-for-hour compensatory time, for example, giving a worker time off
for overtime hours worked the previous week, isn’t usually allowed for
private sector employees covered by the FLSA. Employers and employees
are often puzzled when they learn that comp time isn’t permitted in
the private sector, because it seems like a sensible and mutually
beneficial way to handle overtime in many situations.
has a few options for avoiding premium overtime pay by giving a worker
time off instead of money. One option is to rearrange an employee’s
work schedule during a workweek. For instance, Kathy, a dental
assistant, normally works nine-hour days, four days a week, and four
hours on Friday. On Wednesday afternoon, a patient in the practice
commits to a treatment plan for full upper and lower veneers. The
patient wishes to have them done right away. The doctor asks Kathy if
she would agree to work an extra four hours that evening, Kathy agrees.
The patient agrees to pay in full, funds are verified and the treatment
worked an extra four hours that day, and rather than shouldering the
business with overtime responsibilities, the doctor grants Kathy the day
off on Friday. Kathy is paid for her normal working hours that week, 40,
and receives compensatory time off on Friday, but no overtime pay. This
is legal because Kathy hasn’t worked any overtime as defined by the
FLSA; only the hours over 40 hours a week counts as overtime hours.
key here is to provide the compensatory time during the 40-hour
workweek; not for another period of time to be determined later, for
also permissible to reduce the worker’s hours in another week so that
the amount of the employee’s paycheck remains constant. This comes in
handy when an employee works more than 40 hours in one week. In essence,
the time off is given within the same pay period as the overtime work,
and the employee is given an hour and one-half of time off for each hour
of overtime worked.
example, Sara is a front office employee and gets paid $1500 at the
close of every two-week pay period. Because the doctor she works for has
started a promotion for Invisalign and anticipates a great demand for
services, the doctor wants Sara to work longer hours that week. However,
the doctor doesn’t want to increase Sara’s paycheck. He asks Sara to
work 50 hours during the promotion week and gives her 15 hours off the
next week. Since Sara is paid every two weeks, the office may properly
reduce Sara’s hours the second week to keep her paycheck at the $1500
deals can be risky. It’s unlikely that a federal or state labor
investigator will look into ones’ comp time arrangements unless an
employee files a complaint. Knowing this, it may be tempting to work out
comp time deals with employees to meet the needs of the business and
worker. This can be dangerous. One can never know when a friendly, loyal
employee may turn sour and look for some legal technicalities to use
against an employer.
employers and employees alike feel that the current rules on comp time
are too rigid, relief may be on the way. Congress is working on changes.
One plan being considered would allow a person to offer employees a
choice between receiving overtime pay or one and one-half hours of comp
time for each hour of overtime worked.
final note, the Industrial Commission of Arizona, our State Labor
Department regulating wage and pay, indicates that Arizona does not have
an overtime law. Therefore, federal laws apply, as discussed in this
To sum up, be careful about offering employees compensatory time off in lieu of overtime pay. It can be done, but know that special deals can be risky, and the FLSA is very specific about paying overtime. Be proactive: work your schedule to avoid the issues and complications overtime presents.