Faculty Policies and Procedures

Faculty and Academic Staff Compensatory Time Policy and Procedure

Applies to all Faculty and Academic Staff classified as non-exempt under the Fair Labor Standards Act (FLSA).


Supervisors may provide compensatory time at a time-and-one-half rate for every hour worked over 40 hours in a work week in lieu of time-and-one-half overtime pay for non-exempt employees under the FLSA in certain circumstances. The Faculty and Academic Staff (FAS) Overtime Policy & Procedure governs the payment of overtime to all non-exempt FAS employees. This policy and procedure governs situations in which compensatory time is substituted for overtime.  Under the FLSA, this can be done only if certain conditions, which are set forth in this policy, are met. 

Compensatory time agreement: Each time any compensatory time is to be earned, before it is earned, the supervisor and employee must mutually agree to the compensatory time arrangement, in writing, by completing this agreement.

Cap on time: An employee cannot accrue more than 240 hours of compensatory time; thus, any hours worked over 160 hours (which amounts to 240 hours of compensatory time, earned at a time-and-a-half rate) must be paid. 

Combination time: A combination of overtime and compensatory time may be used. If an employee works, for example, 44 hours in a workweek, it is permissible for two of the hours to be earned as time-and-a-half overtime and two of the hours to be earned as time-and-a-half compensatory time. 

Using earned compensatory time: An employee must request to take any earned compensatory time by giving his/her supervisor sufficient notice and the request should be granted by the supervisor as long as there is no undue disruption to the work.

Flexible time – distinction: Compensatory time is different than “flex time.” For non-exempt employees, flex time may be used only to flex their time within a workweek. Flexible weeks are permissible under the FLSA as long as any hours over 40 are paid at time-and-a-half. 


Reporting of compensatory time: Department: For the employees described in the above Policy, earned compensatory time must be reported in the HR/Payroll System through the EBS portal. Used compensatory time must be reported in this system as well. To record compensatory time earned, departments should enter only the number of hours worked at straight time. The FLSA allows non-exempt employees to accrue a maximum of 240 hours of compensatory time (which reflects 160 overtime hours worked).

Payout procedure: Compensatory time must be paid out upon transfer to a new department/unit by the previous department and upon termination.  Compensatory time must be paid out upon termination at the higher of the two pay rates: current rate or average regular rate over the previous three years.

When an employee transfers to a new unit or terminates, any remaining compensatory time should be paid by submitting the Special Payments Authorization form to Payroll. 

Supervisor Responsibilities:

  1. Be familiar with the University’s policies which govern overtime, compensatory time, hours worked and payroll reporting. Information and resources you will need are contained at www.hr.msu.edu/flsa
  2. Remind employees that they are responsible for knowing this policy and remind them of the importance of adhering to all policies and procedures.
  3. Obtain consent from the employee for substituting compensatory time for overtime prior to the time the work is performed. This form needs to be completed to document this agreement between the supervisor and employee each time the agreement is made.   
  4. Track, review and approve compensatory time earned and used on the employee’s timesheet. Correct any erroneous or missed entries on a timely basis. 
  5. Enter and approve compensatory time when earned and used in the HR/Payroll System through the EBS portal (unless your unit time administrator handles this instead).
  6. Maintain records of time sheets and other records created per this policy for three years.
  7. Ensure compensatory time is paid out upon transfer to a new unit and upon termination.
  8. Because there is a cap on compensatory time, once employees reach that cap, they must be paid overtime for each additional hour worked over the cap.

Employee Responsibilities:

  1. Be sure to seek preapproval if you would like to earn compensatory time instead of overtime by completing this form and indicating your consent on your time sheet. If approved by your supervisor, they will provide notice to you about the status of the amount of your compensatory time accumulation upon request.
  2. Adhere to all University policies, procedures and departmental rules related to time and attendance.
  3. Report promptly any discrepancies or inaccuracies in compensatory time earned or used to your supervisor or Faculty and Academic Staff Affairs (contact information below).

Unit Time Administrator Responsibilities: Obtain the information from the supervisor to enter and/or approve compensatory time in the HR/Payroll System through the EBS portal when earned and used, if the supervisor does not. Complete Special Payment Authorization formwhen payout of compensatory time is required and submit to Payroll. 

MSU Human Resources Employee Records: Review the Special Payment Authorization form for compliance with the policy and accuracy. After approval, the form is sent to the Payroll Office.

Payroll Office: Issue compensatory time payout check at the appropriate biweekly or monthly pay period.

Refer questions to:
Faculty and Academic Staff Affairs
Melanie Trowbridge, mjt@provost.msu.edu 
Kara Yermak, burtkara@provost.msu.edu

Back to Faculty & Academic Staff Policies and Procedures