A compensatory time-off plan is designed to provide employees with paid time off they can use instead of having their employers pay them for pay periods when they work for more than 40 hours. Such plans are widely used in the public sector, but the Fair Labor Standards Acts has tighter restrictions on them whenever they’re used for the private sector workforce. In situations where the employee is nonexempt from FLSA standards, he or she has to take paid time off by a specific pay period, such as the 26th, after the pay period during which the paid time off was earned.
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