Compensatory time off is often misunderstood or abused by employers

fictional background

Mary worked for a year as an intern in California. The contract specified an hourly rate and provided paid time off [PTO.] Mary did not use her PTO, but relied on “Compensatory Time Off” [CTO]that is, time off was taken instead of overtime pay.

In the end, Mary was told that her PTO would not be paid due to a ‘use it or lose it’ policy. Her employer told Mary that the PTO award was not a ‘policy’ of the company, but rather a ‘component of the internship’. That sounded strange to Mary.

The “intern” contract also stated that Mary was exempt from overtime and would not be paid for overtime.

Mary wanted to know: Did her status as an international student intern make any difference to her PTO rights?

Legal Analysis

PAID TIME OFF IS DUE AS SALARY EARNED.

paid time off [PTO] it is the equivalent of wages earned, and must be paid immediately upon termination of employment. The PTO may be capped, but it cannot be lost, ie the “use it or lose it” policy is illegal in California.

COMPENSATORY TIME OFF MUST COMPLY WITH STRICT CALIFORNIA RULES.

compensatory time off [CTO] must comply with the conditions of California: Labor Code Section 204.3:

— Employee requests CTO, in writing, in lieu of overtime.

— The employee is regularly scheduled to work no less than 40 hours in a workweek.

— There is a written agreement for CTO before the work is done.

— Accumulated CTO is due when the employee terminates employment.

Note also that the CTO must be awarded not only for the hour worked more than 8 in a day, but for the rate of overtime: 1 hour worked = 1.5 hours free up to 12 hours, and 2 hours free more than 12 per day.
INTERNS ARE PEOPLE IN TRUE LEARNING ROLES WITHOUT PRODUCTIVITY REQUIREMENTS.

A true intern, usually as part of an academic requirement and approved sponsorship, is not paid. As an intern, Mary’s job duties are under continuous mentoring and supervision, with no discretion to decide matters of importance to the company. Bottom line: Mary is not exempt. Mary should demand her overtime and the unused CTO money equivalent. She is likely to have a claim for the additional 1/2 hour rate even for every hour she was allowed to take off at base hourly pay.