Compensatory time off is often misunderstood or abused by employers

Fictitious background

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

In the end, they told Mary that they would not pay for her PTO due to a “use it or lose it” policy. Her employer told Mary that the PTO awarded 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 overtime.

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

Legal analysis

PAID TIME OFF IS DUE ACCORDING TO WAGES EARNED.

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

COMPENSATORY TIME OFF MUST COMPLY WITH STRICT CALIFORNIA STANDARDS.

Compensatory time off [CTO] Must meet California conditions: Labor Code Section 204.3:

– The employee requests CTO, in writing, instead of overtime.

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

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

– The accrued CTO must be paid when the employee ends their employment.

Note also that the CTO should be given not only for hours worked more than 8 in a day, but at the overtime rate: 1 hour worked = 1.5 hours off up to 12 hours, and 2 hours off more than 12 hours per day.

THE INTERNSHIPS ARE PEOPLE IN TRUE LEARNING FUNCTION WITHOUT PRODUCTIVITY DEMANDS.

A true intern, generally as part of an academic requirement and approved sponsorship, is unpaid. As an intern, Mary’s job duties are under continuous mentorship 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. You are likely entitled to claim the additional 1/2 hour rate even for every hour you were allowed to take off at base hourly wage.