Comp Time Policies and How They Can Impact Labor Accounting for Government Contractors

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construction; government contractor and technology business advisory

By: Stephanie Widzinski

Abstract:

The term “Comp Time” is often overused and can mean different things to different people. When DCAA uses the term comp time, they are referring to the excess hours worked by exempt employees and they are interested in how the contractor accounts for these hours. To that end, it is imperative that contractors include in their labor policy how they account for hours worked over the standard 40-hour workweek.

Most contractors follow total time accounting but even with total time accounting the contractor can institute a comp time policy whereby exempt employees can accumulate excess worked hours and use these hours in the future as additional time off. Under a comp time policy the employer is allowing exempt employees to bank excess hours worked in a timesheet period so the employee can use those hours in the future.

One thing to be aware of when offering a comp time policy is that you could be shifting labor cost from one contract type to another.

This policy allows for employees who work more than 40 hours in a standard workweek to bank the excess hours. This banking of hours would only apply to exempt employees since you are required to pay non-exempt employees for all hours worked. The banking of hours method creates a future liability for your company since employees are simply deferring the payment of these hours to a future period when they take leave. The hours recorded in the timesheet period in which the employee is banking hours would be recorded at the employee’s full hourly rate (no auto adjusting of hourly rate). Learn more about comp time policies by downloading a PDF of the full article.

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